Town of Belhaven v. Pantego Creek, LLC
250 N.C. App. 459
| N.C. Ct. App. | 2016Background
- In 1948 the Town of Belhaven conveyed a 100-foot strip to Pungo District Hospital Corporation (PDHC) by deed declaring fee simple title for use in constructing and operating a hospital; PDHC built and operated Pungo District Hospital.
- In 2011 PDHC transferred operational control via a contract to Vidant Health and created Pantego Creek, LLC; the 2011 Agreement expressly disavowed third‑party beneficiary status.
- Vidant announced closure plans in 2013; a Mediation Agreement with Belhaven and the NAACP provided that if a newly formed Community Board could not assume operations by July 1, 2014, the hospital would close.
- The Community Board failed to meet the deadline, Vidant closed the hospital on July 1, 2014, and Vidant later deeded the property to Pantego Creek in 2014.
- Plaintiffs (Belhaven, the Community Board, and NAACP bodies) sued asserting breach of contract and declaratory relief (reversionary interest in the 1948 deed), fraud, unfair and deceptive trade practices, breach of fiduciary duty, and a N.C. Gen. Stat. § 99D‑1 civil rights conspiracy claim; the trial court granted Defendants’ Rule 12(b)(6) motion to dismiss and Plaintiffs appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether 1948 deed created a reversionary interest preventing alienation away from hospital use | The deed (and constitutional public-purpose constraints) created an implied reversion so property must remain for hospital use | Deed conveys fee simple absolute; no express reversionary language; statute of marketable record title also defeats stale restrictions | No reversionary interest; deed conveys fee simple; claims dismissed |
| Fraud claim against Vidant for secretly planning closure and conveyance | Vidant misrepresented intentions and concealed plans to close, convey, and demolish | Mediation Agreement expressly allowed closure if Community Board failed; plaintiffs failed to plead fraud with particularity and lack standing as non‑parties | Fraud claim dismissed for failure of particularity and lack of standing/third‑party beneficiary status |
| Unfair and deceptive trade practices (UDTP) against Vidant | Vidant’s conduct was deceptive/unfair and harmed Belhaven/Community Board | No deceptive act adequately pleaded; plaintiffs lack standing as customers and alleged only contract-related harms | UDTP claim dismissed for failure to plead deception and lack of injury/standing |
| Breach of fiduciary duty against Pantego Creek | Pantego owed fiduciary duties under the 2011 Agreement | 2011 Agreement not for third‑party beneficiaries; no fiduciary relationship with plaintiffs | Fiduciary duty claim dismissed for failure to allege fiduciary relationship |
| N.C. Gen. Stat. § 99D‑1 civil conspiracy claim (NAACP) | NAACP alleged conspiracy interfering with civil rights due to closure | Statute grants private suit only to individually aggrieved persons (or NC Human Relations Commission); association lacks standing to recover damages for member‑specific harms | Section 99D‑1 claim dismissed for lack of statutory standing by association |
| Challenge to designation of case as "exceptional" and appointment of judge | Plaintiffs argue designation deprived them of fair hearing and request remand before different judge | Designation was Supreme Court/Chief Justice authority; superior court and appellate court lack jurisdiction to overturn that command | Court lacks jurisdiction to review designation; that portion dismissed |
Key Cases Cited
- Station Assocs. v. Dare Cnty., 350 N.C. 367 (court will not infer a reversionary interest absent express, unambiguous language)
- Prelaz v. Town of Canton, 235 N.C. App. 147 (mere statement of purpose in a deed does not create a conditional estate)
- Podrebarac v. Horack, Talley, Pharr & Lowndes, P.A., 231 N.C. App. 70 (standard of review and legal sufficiency on Rule 12(b)(6))
- Bob Timberlake Collection, Inc. v. Edwards, 176 N.C. App. 33 (fraud claims must plead time, place, content, and actor with particularity)
- Dalton v. Camp, 353 N.C. 647 (no breach of fiduciary duty absent fiduciary relationship)
- Babb v. Bynum & Murphrey, PLLC, 182 N.C. App. 750 (third‑party beneficiary elements and strict construction against the claimant)