Fazzari v. Infinity Partners, LLC, 762 S.E.2d 237

Background

In 2006 developers sold ~60 ten-acre "founders' lots" in the Grandfather Vistas project as part of a land‑banking investment scheme: buyers paid $500,000 per lot with a one‑year developer "buyback" at $625,000 and developer promise to pay purchasers' interest until repurchase. Purchasers obtained loans to finance the purchases.
Appraisals used to obtain loans valued each founders' lot at $500,000; actual undeveloped lot values were far lower (≈$40,000–$81,000). Appraiser A. Greg Anderson performed appraisals for Fifth Third and SunTrust; Wells Fargo used other appraisers who nevertheless returned $500,000 values for the lots they reviewed.
Development ceased in 2007, the buybacks never occurred, and purchasers sued developers, lenders (Fifth Third, Wells Fargo, SunTrust), and appraisers alleging fraud, negligent misrepresentation, negligence, UDTP (Chapter 75), conversion, civil conspiracy, etc.
Trial court granted summary judgment for the lenders (and separately for Anderson) dismissing plaintiffs’ negligence, negligent misrepresentation, and Chapter 75 claims; plaintiffs appealed.
On appeal plaintiffs argued lenders owed duties via common law negligence or the Mortgage Lending Act and that they relied on lenders’/appraisers’ misrepresentations; lenders argued no duty existed beyond loan terms and plaintiffs did not actually rely on the appraisals.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether lenders owed a common‑law duty (negligence / negligent misrepresentation) to borrowers based on appraisal/underwriting conduct	Lenders went beyond arm’s‑length lending (promoted the project, used preferred appraisers) and thus owed duties of care; plaintiffs relied on appraisal/underwriting	Lenders owed only duties in loan agreements; appraisal/underwriting benefit lenders; no special fiduciary duty or duty to borrower arose	Court: No common‑law duty; summary judgment for lenders affirmed (no negligent‑misrep claim)
Whether plaintiffs can show justified/actual reliance on lenders’ or appraisers’ representations	Plaintiffs relied on lenders/appraisers to obtain financing and on appraisal values	Plaintiffs signed purchase contracts before appraisals existed, did not obtain independent inquiries, and did not rely on appraisals or lender statements in purchasing	Court: Plaintiffs failed to show justified/actual reliance; summary judgment proper
Whether Mortgage Lending Act (MLA) imposed duties supporting negligence claims	MLA prohibits misrepresentation to mortgage applicants and thus supplies duties	Loans were investment, not residential; MLA applies only to residential mortgages	Court: MLA inapplicable because loans were investment‑purpose; even if applicable reliance was lacking; claim rejected
Whether Fifth Third violated Chapter 75 (UDTP) via misrepresentations or withholding documents affecting appraisals	Fifth Third misled borrowers and withheld buyback agreements from underwriters/appraisers, causing deceptive practice	Plaintiffs did not actually rely; some borrowers testified no misrepresentations; purchase contracts lacked appraisal contingencies and were signed before appraisals	Court: No actual reliance or causation shown; UDTP claims against Fifth Third dismissed; summary judgment affirmed

Key Cases Cited

Marcus Bros. Textiles, Inc. v. Price Waterhouse, LLP, 350 N.C. 214 (standard for summary judgment)
Walker v. Town of Stoneville, 211 N.C. App. 24 (recognizing negligent misrepresentation elements)
Camp v. Leonard, 133 N.C. App. 554 (bank’s duties limited to loan agreement; no duty to inspect collateral)
Branch Banking & Trust Co. v. Thompson, 107 N.C. App. 53 (ordinary debtor‑creditor relationship does not create fiduciary duty)
In re Fifth Third Bank, N.A., 217 N.C. App. 199 (affirming summary judgment for lender on UDTP claims in similar land‑sale/appraisal scheme)
Williams v. United Cmty. Bank, 724 S.E.2d 543 (N.C. Ct. App. 2012) (appraiser summary judgment affirmed in related scheme)