From Casetext: Smarter Legal Research

Cascadden v. Household

North Carolina Court of Appeals
Apr 21, 2009
196 N.C. App. 517 (N.C. Ct. App. 2009)


No. 08-805.

Filed April 21, 2009.

Onslow County No. 08 CVS 1000.

Appeal by plaintiffs from order entered 28 April 2008 by Judge Paul Jones in Onslow County Superior Court. Heard in the Court of Appeals 11 December 2008.

Donald G. Walton, Jr., for plaintiffs-appellants. Nelson Mullins Riley Scarborough, LLP, by Donald R. Pocock, for defendant-appellee Household Realty Corporation. The Law Firm of Hutchens, Senter Britton, PA, by J. Scott Flowers, for defendant-appellee WCRSI, LLC. No brief filed for defendant-appellee Deborah Shofner.

Robert K. Cascadden and Juanita A. Cascadden ("plaintiffs") appeal the trial court's order granting the motion to dismiss their complaint for failure to state a claim upon which relief can be granted pursuant to N.C.R. Civ. P. 12(b)(6). We affirm.

Plaintiffs allege they contracted with defendant Household Realty Corporation ("Household") for a consolidation loan secured by their residence. Plaintiffs executed closing documents for the consolidation loan in January 2001. When they received their firstbill to repay the loan, they noted inconsistencies between the billing statement and the loan they negotiated and closed. Plaintiffs requested a copy of the closing documents and continued to make payments on the loan. After receiving a copy of a Loan Repayment and Security Agreement, plaintiffs noticed their signatures were forged. Plaintiffs examined the deed of trust recorded in the Onslow County Register of Deeds and discovered their signatures on the deed of trust were also forged. Subsequently, Household assigned the loan to WCRSI, LLC ("WCRSI"), a collections agency. On 17 December 2007, WCRSI sent plaintiffs a notice of default and acceleration of mortgage.

On 5 March 2008, plaintiffs filed a complaint alleging fraud, alteration, forgery, and unfair and deceptive practices against Household and the notary public who witnessed the allegedly forged signatures, Deborah Shofner ("Shofner"). Plaintiffs also asked for an injunction against WCRSI to cease the foreclosure or collection on the loan from the plaintiffs during the pendency of the civil action. A copy of the Loan Repayment and Security Agreement was attached to the complaint. On 10 April 2008, Household filed a motion to dismiss the complaint for failure to state a claim upon which relief can be granted. On 28 April 2008, the trial court granted the motion and dismissed plaintiffs' complaint with prejudice. Plaintiffs appeal.

I. Standard of Review

"We review the trial court's dismissal of plaintiffs' suit to determine whether the allegations of the complaint, if treated as true, 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) (citations and internal quotations omitted). The complaint should be construed liberally and dismissal is not proper unless "it appears beyond a doubt that the plaintiff could not prove any set of facts to support his claim which would entitle him to relief." Block v. County of Person, 141 N.C. App. 273, 277-78, 540 S.E.2d 415, 419 (2000) (citation omitted). However, if the face of the complaint does not reveal any law or facts to support the plaintiffs' claim or discloses a fact that defeats plaintiffs' claim, then a motion to dismiss pursuant to Rule 12(b)(6) is proper. Harrold v. Dowd, 149 N.C. App. 777, 780, 561 S.E.2d 914, 917 (2002). Dismissal of claims barred by the statute of limitations are proper grounds for an order granting a Rule 12(b)(6) motion. Kaleel Builders, Inc. v. Ashby, 161 N.C. App. 34, 38, 587 S.E.2d 470, 473 (2003). "[W]hen ruling on a Rule 12(b)(6) motion, a court may properly consider documents which are the subject of a plaintiff's complaint and to which the complaint specifically refers. . . ." Oberlin Capital, L.P. v. Slavin, 147 N.C. App. 52, 60, 554 S.E.2d 840, 847 (2001).

II. Statute of Limitations

"[A] cause of action . . . to set aside an instrument for fraud, accrues, and limitations begin running, when the aggrieved party discovers the facts constituting the fraud, or when, in the exercise of reasonable diligence, such facts should have been discovered." Vail v. Vail, 233 N.C. 109, 116, 63 S.E.2d 202, 207 (1951); N.C. Gen. Stat. § 1-52(9) (2007); State Farm Fire Cas. Co. v. Darsie, 161 N.C. App. 542, 547, 589 S.E.2d 391, 396 (2003) (citation omitted). The claimant asserting the cause of action has the burden of proving the statute of limitations does not apply. State Farm Fire Cas. Co., 161 N.C. App. at 547, 589 S.E.2d at 396.

Ordinarily, when fraud should be discovered in the exercise of reasonable diligence is a question of fact for the jury, particularly when the evidence is inconclusive or conflicting. However, where the evidence is clear and shows without conflict that the claimant had both the capacity and opportunity to discover the fraud but failed to do so, the absence of reasonable diligence is established as a matter of law.

Id. at 548, 589 S.E.2d at 397 (citing Huss v. Huss, 31 N.C. App. 463, 468, 230 S.E.2d 159, 163 (1976); Moore v. Casualty Co., 207 N.C. 433, 437, 177 S.E. 406, 408 (1934); Grubb Properties, Inc. v. Simms Investment Co., 101 N.C. App. 498, 501, 400 S.E.2d 85, 88 (1991)).

Plaintiffs argue their cause of action accrued upon actual notice of the fraud, which occurred when they received a copy of the Loan Repayment and Security Agreement or when they inspected the recorded copy of the deed of trust. Because the pleadings do not indicate the date plaintiffs received a copy of the agreement or inspected the recorded deed of trust, plaintiffs contend it is not clear from the face of the complaint that the claims are time-barred. We disagree. Under North Carolina law, "the notice which starts the running of the statute is not complete information of all details of the transaction. The statute starts to run when the plaintiff acquires sufficient information to give rise to a reasonable belief that a fraudulent [action] has occurred." New Amsterdam Cas. Co. v. Waller, 323 F.2d 20, 26 (4th Cir. 1963).

As to either [fraud or negligent misrepresentation] . . . when the party relying on the false or misleading representation could have discovered the truth upon inquiry, the complaint must allege that he was denied the opportunity to investigate or that he could not have learned the true facts by exercise of reasonable diligence.

Hudson-Cole Dev. Corp. v. Beemer, 132 N.C. App. 341, 346, 511 S.E.2d 309, 313 (1999); Oberlin Capital, L.P., 147 N.C. App. at 60, 554 S.E.2d at 847 (where complaint for fraud did not allege plaintiffs were denied the opportunity to investigate or that plaintiffs could not have learned true facts through reasonable diligence, it was properly dismissed).

In Vail, the plaintiffs moved to set aside a deed from a mother to her son on the basis of fraud. 233 N.C. at 111, 63 S.E.2d at 204. The deed was recorded on 3 October 1944. The action was filed on 15 December 1948. Defendants argued the claim was barred by the three-year statute of limitations, which accrued the date the deed was recorded. The Court held that there were no facts or circumstances on the face of the deed to excite a suspicion as to fraud and the plaintiffs' action was not time-barred. Id., 233 N.C. at 117, 63 S.E.2d at 208. Here, the Loan Repayment and Security Agreement indicates the date of the loan was 22 January 2001 and the first payment was due 22 February 2001. Plaintiffs alleged that upon receiving their first billing statement, they noticed the amount of payment was inconsistent with the loan documents they had executed. Plaintiffs also alleged they discovered the forgery after examining the recorded copy of the deed of trust, which they listed as being recorded at Book 1681, Page 427 in the Onslow County Register of Deeds office. Although plaintiffs did not indicate in their complaint when they discovered the forgery, their allegations reveal plaintiffs had the capacity and opportunity through reasonable due diligence to discover the fraud before 5 March 2005, a date that would have been three years before filing the complaint. See N.C. Gen. Stat. § 1-52(9) (2007) (claim for fraud must be filed within three years of discovery). Plaintiffs further alleged that they noticed inconsistencies regarding the terms of their loan after receiving their first billing statement in 2001. At that point, they could have examined the deed of trust in the Onslow County Register of Deeds office. Unlike the plaintiffs in Vail, plaintiffs alleged the forgery was discoverable on the face of the deed of trust. Plaintiffs did not allege they were denied the opportunity to conduct an investigation or that they could not have discovered the facts through due diligence. We hold plaintiffs have not met their burden of demonstrating the statute of limitations is not a bar to their fraud claim.

B. Unfair and Deceptive Practices Claim

"Any civil action brought under [Chapter 75] to enforce the provisions thereof shall be barred unless commenced within four years after the cause of action accrues." N.C. Gen. Stat. § 75-16.2 (2007). Here, according to plaintiffs' complaint, their claim for unfair and deceptive trade practices was based on fraud. See Nash v. Motorola Communications and Electronics, Inc., 96 N.C. App. 329, 332, 385 S.E.2d 537, 539 (1989) (statute of limitations for unfair and deceptive practices claim based on fraud runs from the date the plaintiffs discovered the fraud or reasonably should have discovered the fraud). We have already concluded plaintiffs did not meet their burden of demonstrating the fraud claim was not barred by the applicable statute of limitations, since the claim accrued at the time they received their first billing statement in 2001. Likewise, the unfair and deceptive trade practices claim was also barred. Although the unfair and deceptive trade practices claim has a four-year statute of limitations, over four years elapsed from the time plaintiffs received their first billing statement until the date of the filing of the complaint on 5 March 2008. This assignment of error is overruled.

III. Injunctive Relief

Plaintiffs next argue the trial court erred in dismissing their claim for injunctive relief against defendant WCRSI. We disagree.

In order to justify issuance of a preliminary injunction, plaintiff must show a likelihood of success on the merits of his case and either that he is likely to sustain irreparable loss unless the injunction is issued or that issuance is necessary for the protection of plaintiff's rights during the course of litigation. Adams v. Beard Development Corp., 116 N.C. App. 105, 109, 446 S.E.2d 862, 865 (1994).

Plaintiffs failed to show they were likely to succeed on the merits of the fraud claim since their claim was barred by the statute of limitations. Adams, 116 N.C. App. at 109, 446 S.E.2d at 865 (the trial court properly denied plaintiff's motion for a preliminary injunction where plaintiff failed to establish that he was reasonably likely to succeed on the merits of his suit; the statute of limitations barred his claim).


Judges STEELMAN and STROUD concur.

Report per Rule 30(e).

Summaries of

Cascadden v. Household

North Carolina Court of Appeals
Apr 21, 2009
196 N.C. App. 517 (N.C. Ct. App. 2009)
Case details for

Cascadden v. Household

Case Details


Court:North Carolina Court of Appeals

Date published: Apr 21, 2009


196 N.C. App. 517 (N.C. Ct. App. 2009)

Citing Cases

Gilchrist v. Wells Fargo Bank, Nat'l Ass'n

Instead, there also must be "facts and circumstances sufficient to put the defrauded person on inquiry which,…