Rountree v. Chowan Cty.
796 S.E.2d 827
N.C. Ct. App.2017Background
- Rountree, a retired LGERS beneficiary and former Nash County tax administrator, accepted an at-will 24-month tax administrator contract from Chowan County after assurances the arrangement would protect his retirement benefits.
- Chowan County manager Peter Rascoe drafted an offer letter stating the role would be a contract position, pay $46,800/year (or $30/hr for a target 30-hour week), and that retirement contributions would not be withheld because Rountree was already receiving benefits.
- Rascoe, aware of LGERS restrictions on retirees returning to work, did not guarantee Rountree’s benefits but believed the arrangement would be suitable; Rountree did not independently verify eligibility rules before accepting.
- After nearly two years on the job, the Retirement Systems Division determined Rountree had returned to regular employment and had been wrongfully paid $114,448.32 in retirement benefits; repayment and deductions followed, and Rountree resigned.
- Rountree sued Chowan County for breach of contract and negligent misrepresentation; the trial court granted summary judgment to Chowan on both claims. Rountree appealed on the negligent misrepresentation ruling.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the economic loss rule bars Rountree's negligent misrepresentation claim | Rountree asserted his tort claim was premised on pre-contract misrepresentations inducing him to sign, so it is not barred | Chowan argued the tort merely restates the contract claim and is barred by the economic loss rule | Court: Claim could avoid the rule only if it rests on a duty separate from the contract; plaintiff failed to show such a separate duty |
| Whether Chowan owed a legal duty of care to Rountree regarding accuracy of benefits information | Rountree relied on Rascoe’s assurances and argued Chowan should be liable for negligent misrepresentation | Chowan argued no special relationship or exclusive access to information existed and the information was publicly available; no separate duty arose | Court: No duty arose — unlike professionals or sellers with exclusive control, Chowan did not uniquely control LGERS information and Rountree had equal access |
| Whether Rountree’s reliance on Rascoe was justifiable | Rountree contended he was entitled to rely on Rascoe’s statements and need not investigate further | Chowan pointed to Rountree’s familiarity with LGERS and the State Employee Retirement Handbook, which made independent inquiry reasonable | Court: Reliance was unjustified; Rountree produced no evidence he inquired, was prevented from inquiring, or reasonably could not have discovered the truth |
| Whether summary judgment was appropriate on negligent misrepresentation | Rountree argued factual disputes existed that should have precluded summary judgment | Chowan argued (1) absence of a separate duty and (2) lack of evidence of justifiable reliance defeated the claim | Court: Affirmed summary judgment for Chowan — plaintiff failed to forecast evidence of duty and justifiable reliance |
Key Cases Cited
- Raritan River Steel Co. v. Cherry, Bekaert & Holland, 322 N.C. 200 (1988) (adopts Restatement (Second) of Torts § 552 approach and explains when a professional who prepares information owes a duty to intended third-party recipients)
- Dallaire v. Bank of Am., N.A., 367 N.C. 363 (2014) (reliance is unreasonable where the plaintiff fails to make reasonable inquiry into representations and offers no evidence they were prevented from investigating)
- Arnesen v. Rivers Edge Golf Club & Plantation, Inc., 368 N.C. 440 (2015) (to plead justifiable reliance, plaintiff must allege they made a reasonable inquiry or were prevented from doing so)
- Kindred of N. Carolina, Inc. v. Bond, 160 N.C. App. 90 (2003) (seller of a closely held business may owe a duty to provide accurate financial information where the seller controls information and buyer lacks ability to investigate)