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Building, development cases top list of defense wins

Building, development cases top list of defense wins


 Wife’s loan guarantee wrongfully demanded, court rules

The North Carolina Court of Appeals saved a developer’s wife millions when it held that a bank had wrongfully insisted on her guarantee for her husband’s loan, thus keeping the bank’s successor from pursuing damages against her.Building plans heads together

Lionel Yow and two business partners borrowed $4.28 million from Regions Bank to develop Lighthouse Cove, a planned residential subdivision in Brunswick County.

Regions Bank sold its interest in the loan to RL Regi North Carolina. Yow and his partners, doing business as LC Entities, defaulted on the loan, and RL Regi pursued damages against all three partners and two wives who had guaranteed the loans but were not involved in the development project. In response, Connie Yow claimed that Regions Bank unlawfully obtained her guaranty in violation of the federal Equal Credit Opportunity Act, which prevents discrimination on the basis of, among other things, marital status.

A jury found that Regions Bank required Yow be a guarantor for the loans without determining whether the LC Entities partners were independently creditworthy under the bank’s standards and that this was something the bank did not routinely require. A judge decided that Regions Bank had therefore violated the ECOA.

The judge also decided that the violation released Yow from any liability under the loans. On Aug. 20, the Court of Appeals affirmed the ruling in Yow’s favor, saying that it was the approach most consistent with state law.


Equal Credit Opportunity Act violation

Case name: RL Regi North Carolina, LLC v. Lighthouse Cove, LLC

Case number: COA12-1279

Court: N.C. Court of Appeals

Judge: Judge Chris Dillon, with Judge Ann Marie Calabria and Judge Sam Ervin IV concurring

Date of decision: Aug. 20

Demand:$4.28 million, aggregate amount committed for loans

Amount of award:$0

Attorneys for plaintiff: Christopher J. Blake, Joseph S. Dowdy and Meghan E.B. Pridemore of Nelson Mullins Riley & Scarborough (Raleigh)

Attorney for defendants: Matthew Buckmiller of Shipman & Wright (Wilmington)



 Condo association’s $3.7 million suit dismissed

Several defendants successfully fended off $3.7 million in defective construction claims from a condominium association — but the judge who dismissed the case did not make clear why.

The Trillium Ridge Condominium Association alleged that construction defects had led to millions of dollars in pervasive water damage in the units. Judge Marvin P. Pope dismissed the claims against all the defendants.

Robert Allen, attorney for two defendants, said the only defense common to all the defendants, including the developer, the general contractor and the designer, was an argument that the suit was brought outside the state’s statute of limitations.

The developers of Trillium Ridge, Allen’s clients, served as association directors until enough of the units had been sold to allow the new owners to take over as directors. That handover occurred in February 2007. A few months later, the new association directors authorized a study that found the buildings had defective flashing. The directors decided to caulk over the flashing, which Allen said proved that the condo association was aware of the problem in 2007, more than three years before it filed suit, which would put the lawsuit outside the statute of limitations.


Defective construction

Case name: Trillium Ridge Condominium Association, Inc. v. Trillium Links & Village, LLC, et al. Trillium Construction Company, LLC, Shamburger Design Studio, P.C., Shamburger Design, Inc., S.C. Culbreth, Jr., and Gregory A. Ward

Case number: 11 CVS 462

Court: Jackson County Superior Court

Judge: Marvin P. Pope

Date of verdict: Aug. 20

Amount: $0

Attorneys for plaintiff: Dudley Humphrey, David Smith and Dustin Greene (Winston-Salem)

Attorneys for defendants: Robert E. Allen (Asheville), Luke Sbarra and Jon Player (Charlotte), Mark Meister (Asheville) and William Cannon (Waynesville)




 Doctors, developer defeat bank’s recovery effort

A Union County jury found a group of doctors and a developer not liable for damages of nearly $3 million after a bank foreclosed on its commercial loan.

Due to bank closings and sale of the loan, the investors, doing business as MD Group, never received the total loan amount of $5.5 million they originally agreed to borrow for construction of a medical office building.

The Federal Deposit Insurance Corporation was appointed as receiver for the original lender, which closed after advancing MD Group $4.2 million. FDIC refused to advance the MD Group the promised funds and instead encouraged MD Group to obtain alternative financing. The group’s Charlotte attorney, Jeff Long, said the group found no other lender and the project languished, but the FDIC never served notice of default.

The loan changed hands several times before CML-NC Waxhaw, LLC finally purchased it loan with an “as is” disclaimer and noticed that the loan had multiple problems associated with the previous lenders. CML-NC Waxhaw foreclosed on the property. By the time the parties tried the case, CML-NC Waxhaw estimated its damages were $3.063 million.

Judge W. David Lee presented the jury with the question of whether MD Group had breached the construction loan arrangement by non-performance. The jury was swayed by MD Group’s argument that because others had breached their commitment, MD Groups’ obligations under the loan were excused.


Breach of contract

Case name: Multibank 2009-1 CML-ADC Venture, LLC and CML-NC Waxhaw, LLC v MD Group, LLC, Patch, Guthmann, Collins and Martin

Court:Union County Superior Court

Case #: 10-CVS-2363

Judge:W. David Lee

Demand: $3,062,287

Verdict amount: $0

Date of verdict: Feb. 14

Attorneys for plaintiff: Michael L. Shor and William M. Starr of Nelson Mullins Riley & Scarborough (Charlotte)

Attorney for defendant: Jeffrey A. Long of Bray & Long (Charlotte), and Eric A. Rogers of Shumaker, Loop & Kendrick (Charlotte)



 Homebuilder dodges $3 million defective construction claim

A homebuilder persuaded a federal judge that it was not liable for a defective construction claim in part because the plaintiffs failed to state in their contract that the builder was responsible for soil tests.

Plaintiffs Robert and Kimberly Gunkel contracted with Robbinsville Custom Molding in 2006 to serve as general contractor for construction of a $1.3 million house on a steep, waterfront lot. Before construction was complete, the Gunkels and RCM entered into a dissolution agreement, and other contractors finished the work. When the foundation slab and drywall of the house began to crack, the Gunkels filed against RCM.

In his summary judgment order finding in favor of the defendant, U.S. District Court Judge Martin Reidinger noted that the plaintiffs’ attorneys failed to offer sufficient forecast of evidence for their claims. First among them was that RCM breached the contract by failing to test the soil for density before planting the foundation, which led to settlement that caused the cracks. The defendants responded that the contract did not specify that RCM conduct a soil test, and that RCM had complied with the plans and specifications provided by the Gunkels’ architect and engineer.

According to affidavits cited in the Reidinger’s order, the plaintiffs’ engineer assumed that the undisturbed soil where the foundations were located had a load-bearing capacity of at least 2,000 pounds per square-foot, but did not inspect the soil before building began. The engineer also assumed it was the contractor’s legal responsibility to check the soil, but the International Residential Code does not support that assumption.

The plaintiffs filed for a rehearing.


Breach of contract, negligence, fraud

Injuries alleged: Defective construction

Case name: Gunkel v. Robbinsville Custom Molding, et al.

Case number:2:11cv07

Court:U.S. District Court (Bryson City)

Name of judge:Martin Reidinger

Date of verdict:Jan. 10

Defendant’s pre-trial offer:$50,000

Plaintiffs’ final pre-trial demand:$550,000


Insurance carrier:Auto-Owners Insurance

Attorneys for plaintiff:Charles Cloninger, and Haley Roper of Ward & Smith (Asheville)

Attorneys for defendant:Ervin L. Ball Jr. and Alexandra Cury of Ball, Barden & Bell (Asheville)


 Contributory negligence derails $3 million injury claim

A Wake County jury found that a postal worker who lost the lower half of one leg and four toes after a mail cart struck him in the back contributed to the negligence that resulted in his injury.

The defense also provided evidence that the amputation may not have been directly caused by the incident.

Levi Hamilton worked as an expeditor in a mail processing center. Rex Watkins, a driver for a contract trucking company owned by Ronald Pate, was picking up a load of mail at the center when a heavy cart got stuck on a ramp adjacent to Watkins’ truck. He activated an electronic lift that caused the cart to roll into Hamilton.

Doctors who treated Hamilton noted that he had pre-existing blood clotting in his aorta. Over the next six months, Hamilton complained of symptoms such as pain in his lower extremities, cold toes, and mottled skin on the feet. Doctors determined this was caused by the clotting in his blood. Hamilton underwent surgery, and his right lower leg became infected with gangrene and needed amputation below the knee. He later also lost four toes on his left foot. Hamilton’s doctor contended that the trauma from the blow had caused the blood clots to shower throughout his bloodstream, resulting in the amputations.

The defendants offered testimony from two vascular surgeons who claimed that Hamilton’s condition was clearly pre-existing, and that a traumatic blow like the one he suffered would not cause the kinds of injuries Hamilton alleged.

The defendants also argued that Hamilton failed to keep a proper lookout on the busy loading dock.



Case name: Levi Hamilton, Jr. vs. Ronald K. Pate a/k/a Ronald Pate Trucking and Rex Watkins 

Case number: 09 CVS 21372

Court: Wake County Superior Court

Name of judge: Carl Fox

Date of verdict: March 22

Injuries alleged: Traumatic blow to the back allegedly causing embolism of abdominal aortic aneurysm, ultimately resulting in below the knee amputation of right leg and loss of four toes on the left.

Damages claimed: $315,199.23 in medical expenses, $200,000.00 in lost wages, loss of limb

Demand: $3 million

Highest offer: $10,001 offer of judgment

Verdict: $0 (contributory negligence)

Attorney for defendant: George W. Miller III of Haywood, Denny & Miller (Durham)

Attorney for plaintiff: Daniel F. Read (Durham)

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