Ussery v. Branch Banking & Trust Co.

DILLON, Judge,

concurring in part and dissenting in part.

I concur with the majority in its result that there is a genuine issue of material fact on Defendant’s counterclaim as to the amount of accrued interest due under the promissory note. However, because I believe that there is no genuine issue of material fact as to Plaintiff’s claims 1 or to the remainder of Defendant’s counterclaims, I respectfully dissent.

I: Statutes of Limitation

I agree with the majority’s holding that “[bjecause Plaintiff did not institute proceedings based on his alleged causes of action within the time allotted, they are time-barred.”

II: Equitable Estoppel

Plaintiff alleges in his complaint that Defendant made certain “assurances” inducing Plaintiff not to file this action before the statute of limitations had run. The majority holds these alleged “assurances” are sufficient to create a genuine issue of material fact as to whether Defendant is equitably estopped from asserting the statute of limitations as an affirmative defense. The majority has grouped these “assurances” allegedly made by Defendant into three categories:

1. Defendant assured Plaintiff that “everything would be worked out in the Barker litigation”;

2. Defendant requested Plaintiff “hold off on instituting an action [] to allow resolution of the Barker matter”; and

3. Defendant assured Plaintiff that “the Note would be canceled upon resolution of the Barker [suit] [,]... the loan would be forgiven[,] and [Plaintiff] would be reimbursed any expenses incurred related to [Defendant’s] failure to obtain the [government loan].”

I have thoroughly examined the record on appeal, and I do not believe the evidence before the trial shows that there is a genuine issue of material fact as to Plaintiff’s claim.

Regarding the first two “assurances” cited above, there is nothing in them from which a jury could infer that Defendant promised to settle *448 the claim in any particular way. The statements are nothing more than mere “promises” that Defendant would work to resolve Plaintiffs claims in the future. We have consistently held that a mere promise to negotiate a resolution in the future, as opposed to an assurance that a claim would be resolved in a definitive way, is not the type of promise which would equitably estop a defendant from asserting a statute of limitations defense. See Duke v. St. Paul, 95 N.C. App. 663 , 384 S.E.2d 36 (1989); Teague v. Randolph, 129 N.C. App. 766 , 501 S.E.2d 382 (1998); Blizzard v. Smith, 77 N.C. App. 594 , 335 S.E.2d 762 (1985), cert. denied, 315 N.C. 389 , 339 S.E.2d 410 (1986).

In Duke v. St. Paul, we stated that “[m]ere negotiation with a possible settlement unsuccessfully accomplished is not that type of conduct designed to lull the claimant into a false sense of security so as to constitute an estoppel by conduct thus precluding an assertion of. . . [limitations] by the insured.” Id. at 673, 384 S.E.2d at 42 .

In Blizzard , we held that the plaintiff “fail[ed] to show the essential elements of equitable estoppel” based on the following communication from defendant’s counsel to plaintiff’s counsel: “Please do not institute any lawsuit until we have had a chance to perhaps work this matter out.” Id. at 595-596 , 335 S.E.2d at 763 .

In Teague , we held that the elements of equitable estoppel were not present based on the following facts: A representative for the defendant’s liability insurer “indicated to plaintiffs’ counsel his willingness to discuss settlement or, failing that, arbitration as a possible means of resolving the matter[.]” Id. at 772 , 501 S.E.2d at 376 . Additionally, the representative “proposed a time and date to meet with [the plaintiffs’] counsel [to] discuss settlement” but later “cancelled further negotiations ... citing his belief that [the plaintiffs’] claim was time barred.” Id. at 772 , 501 S.E.2d at 386-387 .

The majority relies on Duke Univ. v. Stainback, 320 N.C. 337 , 357 S.E.2d 690 (1987), Cleveland Constr., Inc. v. Ellis-Don Constr., 210 N.C. App. 522 , 709 S.E.2d 512 (2011), and Miller v. Talton, 112 N.C. App. 484 , 435 S.E.2d 793 (1993), to support its holding that there is a genuine issue of material fact as to plaintiff’s equitable estoppel claim in this case. I believe each of the foregoing cases are readily distinguishable from this case because each involves statements or conduct which led a plaintiff to believe that the defendant would resolve a claim in a definitive way. In Stainback and in Cleveland Construction, the defendant’s conduct led the plaintiff to believe that the defendant would pay the plaintiff’s claim if and when the defendant received a recovery from a certain third *449 party. However, in both cases, the defendant subsequently received money from the third party, but refused to pay the plaintiff. In Miller , the defendant promised his neighbor to fix a water-flow problem which had damaged his neighbor’s land, again an “assurance” to resolve a dispute in a particular way. Relying on this promise, the neighbor held off on filing an action. However, after the statute of limitations had run, the defendant refused to fix the problem.

The third “assurance” cited by the majority is an oral statement allegedly made by an officer of the Defendant that Defendant would cancel the promissory note and reimburse Plaintiff his expenses he had incurred. However, I believe this alleged oral assurance by Defendant’s officer is inadmissible and incompetent under the parole evidence rule, and therefore cannot be relied upon to create a material factual issue to withstand a summary judgment motion. Here, after Defendant’s alleged assured Plaintiff that the note would be forgiven, the record shows that on six occasions over a 44-month period, from April 2003 to November 2006, Plaintiff executed separate “Note Modification Agreementfs].” In each of these six written agreements, Plaintiff acknowledged owing the debt and promised to repay the debt.

The applicability of the parole evidence rule in the context of a promissory note has been dealt with extensively by our Supreme Court, most notably in the case Borden v. Brower, 284 N.C. 54 , 199 S.E.2d 414 (1973). After stating the basic principles of the parole evidence rule generally, the Court in Borden stated the following:

Promissory notes are not generally subject to the parole evidence rule to the same extent as other contracts .... [I]t is rather common for a promissory note to be intended as only a partial integration of the agreement in pursuance of which it was given, and parole evidence as between the original parties may well be admissible so far as it is not inconsistent with the express terms of the note.

Id. at 61 , 199 S.E.2d at 419-20 (1973) (emphasis added); see also Bank v. Gillespie, 291 N.C. 303, 308 , 230 S.E.2d 375, 378-79 (1976).

The Borden Court provided situations where parole evidence may be admissible to show an agreement at variance to the terms of the written promissoiy note:

“[T]his Court has permitted variance of [the] expressed terms [of a promissory note] by showing that it was to be enforced only on the happening of certain conditions, or *450 only to the extent necessary to accomplish a certain purpose, or that it was payable only out of a certain fund, or that it was given as evidence of an advancement, or that it might be discharged by a method of payment or performance different from that stated in the writing.”

Id. at 63 , 199 S.E.2d at 421 . The Court cited eleven “[o]ther promissory note cases involving the North Carolina method of payment and discharge exception to the parole evidence rule” as follows:

“Carroll v. Brown, 228 N.C. 636 , 46 S.E.2d 715 (1948) (note to be paid out of profits of a partnership in which maker and payee were engaged); Ripple v. Stevenson, 223 N.C. 284 , 25 S.E.2d 836 (1943) (note to be paid out of rents and profits from an office building); Insurance Co. v. Guin, 215 N.C. 92 , 1 S.E.2d 123 (1939) (note to be paid out of commissions); Bank v. Rosenstein, 207 N.C. 529 , 177 S.E. 643 (1935) (co-maker’s liability on a note limited to the value of land covered by a deed of trust); Galloway v. Thrash, 207 N.C. 165 , 176 S.E. 303 (1934) (note to be paid by crediting it against payee’s anticipated share of maker’s estate); Trust Co. v. Wilder, 206 N.C. 124 , 172 S.E. 884 (1934) (note to be paid out of proceeds of land when land was sold);...; Kerchner v. McRae, 80 N.C. 219 (1877) (bond to be credited with the proceeds from sale of cotton).”

Id. at 62-63, 199 S.E.2d at 420 . In Borden and in the eleven cases cited in that decision, a debtor was allowed to introduce parole evidence to show an oral agreement regarding the means by which the obligation recited in the written note would be satisfied, because the parole evidence did not contradict the terms of the note. However, there is no exception to the parole evidence rule regarding evidence that a borrower simply and inexplicably does not owe the money he was loaned.

To the contrary, the Supreme Court’s explained Borden in its prior ruling in Vending Co. v. Turner, 267 N.C. 576 , 148 S.E.2d 531 (1966). In Vending Co., our Supreme Court stated that “[t]he promise set forth in [a promissory] note could not be contradicted or destroyed by parole testimony that the makers thereof would not be called upon to pay in accordance with the terms of the note.” Id. at 582 , 148 S.E.2d at 536 . In explaining Vending Co., the Borden Court stated:

“Although that opinion does contain a general statement to the effect that a promise set forth in the note could not be contradicted or destroyed by parol testimony, the *451 opinion actually affirmed a judgment that embodies the mode of payment or method of discharge exception to the parol evidence rule.”

Borden, 284 N.C. at 65 , 148 S.E.2d at 422 (emphasis added).

I believe Borden and the eleven cases cited therein are distinguishable from the case sub judice. In this case, the alleged oral “assurance” made prior to the written modification agreements was that Defendant was simply forgiving the $425,000 note and all interest expense payable thereunder. The “assurance” was not an oral agreement describing the means by which the payment of the note would be paid or the method by which Plaintiff’s obligation would be discharged or otherwise which would fall under any of the other exceptions recited in Borden where parole evidence would be allowed. Rather, the alleged oral “assurance” that the promissory note would not have to be paid back under any circumstance is in direct contradiction to the terms of the six written agreements executed by Plaintiff. Therefore, I believe the alleged statement by Plaintiff that Defendant would simply forgive the $425,000 note and all of Plaintiff’s expenses is incompetent, as it violates the parole evidence rule, and therefore, must not be considered in the determination of whether there is a genuine issue of material fact with regard to Plaintiff’s claims. 2

Even if this alleged “assurance” is not barred by the parole evidence rule, I do not believe the assurance is otherwise sufficient to create a jury question regarding equitable estoppel. Plaintiff admits in his brief and in his affidavit that was offered at the summary judgment hearing that the alleged assurance was merely part of an unresolved settlement negotiation. Specifically, on page 8 of his brief, Plaintiff recites the following as his version of the facts:

“[Defendant] continued to assure [Plaintiff] after the Barker settlement was entered that their $425,000.00 Note, and their expenses related to [Defendant’s] failure *452 to procure financing for Barker and Chair Specialties, would be worked out.... Although [Defendant] failed to propose a specific plan and improperly refused to provide Plaintiff information regarding [Defendant’s settlement with Mr. Barker, Defendant’s] issuance of several Note Modification Agreements from 2003 through 2006, as additional consideration for refraining from filing suit, and its agreement on 5 July 2006 to discuss resolution as previously pledged, reassured Plaintiffs that [Defendant] would honor its promise.

(emphasis added.) Also, Plaintiff, in his affidavit, characterizes the assurance in the following way:

I have previously set forth in Plaintiff’s responses to Defendant’s written discovery, my conversations with Charles Smith, authorized representative of BB&T, at the time of the litigation was filed by Wayne Baker against BB&T ... and the fact that Charles Smith had advised me that the issues involving the expenses and debt involving Chair Specialties, including the $425,000.00 Note, would be resolved.

(emphasis added.) Since Plaintiff admitted at the summary judgment hearing and in his brief that he interpreted the alleged assurance as part of a settlement that had not yet been resolved, this assurance is essentially the same as the first two assurances, namely a promise to reach a definitive resolution in the future; and, likewise, cannot be relied upon by Plaintiff to establish a genuine issue of material fact regarding equitable estoppel. 3 See St. Paul, 95 N.C. App. 663 , 384 S.E.2d 36 ; Randolph, 129 N.C. App. 766 , 501 S.E.2d 382 ; Smith, 77 N.C. App. 594 , 335 S.E.2d 762 .

Ill: Defendant’s Counterclaims

I believe that Defendant is entitled to judgment as a matter of law on its counterclaims to recover the outstanding principal due on the *453 note of $425,000.00; pre-judgment interest from December 13, 2011 in the amount of $97.40 per day; and attorneys’ fees in the amount of $63,750.00. However, I believe the evidence in the record creates a genuine issue of material fact as to the amount of interest owed on the promissory note. There is evidence in the record that Plaintiff would not be responsible for interest payments for at least some period following his last interest payment made in April 2006. This evidence includes a printout generated by Defendant that $38,164.14 in interest was waived in 2007. Therefore, I would reverse the portion of the summary judgment order which awards the interest due on the promissory note and remand this cause for a jury trial on this issue only.

IV: Conclusion

For the reasons stated above, I would vote to affirm the trial court’s summary judgment order to the extent that it grants summary judgment in favor of Defendant on Plaintiff’s claims and to the extent that it grants summary judgment to Defendant on its counterclaims for the principal due on the promissory note, prejudgment interest, and attorneys’ fees. I would vote to reverse and remand for a trial on the issue of damages with respect to the amount of interest due on the promissory note.

. As pointed out by the majority, though there are two plaintiffs, the record consistently refers to Mr. Ussery as “Plaintiff,” as he was the primary, if not sole, actor.

. In Bank v. Gillespie, in which the Supreme Court quotes the Borden decision extensively, the Court considered “the course of dealings” between the parties to determine whether parole evidence would be admissible. Id. at 310, 230 S.E.2d at 379-380 . In the case sub judice, Plaintiffs course of dealing with regard to the note is in direct contradiction to the alleged “assurance” that he would not be held liable for the principle or interest expense under the note. Specifically, in addition to executing six note modifications where he acknowledged the debt and agreed to pay it back, an attachment to Plaintiffs own affidavit shows that Plaintiff continued to pay interest expenses on the promissory note on a number of occasions, with the last interest payment in the amount of $11,064.76 being made in April 2006.

. Additionally, Plaintiff failed to show why it would have been “reasonable” for him to rely on any statement by Defendant that (1) his claims against Defendant regarding the promissory note would somehow be resolved or worked out in an unspecified way without his input or participation and in the course of the legal proceeding with Mr. Barker, who was not a party to the note; or (2) that Defendant would unilaterally forgive the entire $425,000.00 debt and repay Plaintiffs incurred expenses where Defendant otherwise required Plaintiff to continue paying interest, which Defendant, in fact, continued to pay. Adkins v. Adkins, 82 N.C. App. 289,291 , 346 S.E.2d 220,221 (1986) (stating that “[a]n essential element of [equitable estoppel] is reasonable reliance”).