               IN THE COURT OF APPEALS OF NORTH CAROLINA

                                 No. COA17-1032

                               Filed: 19 June 2018

Chatham County, No. 16 CVS 724

SERAFINO “VINCE” CORDARO, Plaintiff,

              v.

HARRINGTON BANK, FSB, n/k/a BANK OF NORTH CAROLINA, a North Carolina
Bank, Defendant,

and


BANK OF NORTH CAROLINA, Third-Party Plaintiff,

              v.

DANNY D. GOODWIN D/B/A DANNY GOODWIN APPRAISALS, Third-Party
Defendant.



      Appeal by plaintiff from order entered 8 August 2017 by Judge Lindsay R.

Davis, Jr. in Chatham County Superior Court. Heard in the Court of Appeals 7

March 2018.


      Sigmon Law, PLLC, by Mark R. Sigmon, for plaintiff-appellant.

      Brooks, Pierce, McLendon, Humphrey & Leonard, L.L.P, by S. Wilson Quick
      and Reid L. Phillips for defendant-appellee.


      DAVIS, Judge.


      In this appeal, we consider the potential liability of a bank for providing an

inaccurate appraisal value to its borrower in connection with a residential loan.
                             CORDARO V. HARRINGTON BANK

                                     Opinion of the Court



Serafino “Vince” Cordaro filed this civil action asserting claims against Harrington

Bank1       (“Harrington”)   premised     upon     theories    of   negligence,    negligent

misrepresentation, breach of contract, breach of the implied covenant of good faith

and fair dealing, and unfair and deceptive trade practices pursuant to N.C. Gen. Stat.

§ 75-1.1. Because we conclude that Cordaro’s complaint failed to sufficiently plead

justifiable reliance upon the appraisal information at issue or the existence of a

contractual duty owed to him by Harrington with regard to the appraisal, we hold

that the trial court properly granted Harrington’s motion to dismiss.

                        Factual and Procedural Background

        We have summarized the pertinent facts below using Plaintiff’s own

statements from his complaint, which we treat as true in reviewing a trial court's

order granting a motion to dismiss. See, e.g., Stein v. Asheville City Bd. of Educ., 360

N.C. 321, 325, 626 S.E.2d 263, 266 (2006) (“When reviewing a complaint dismissed

under Rule 12(b)(6), we treat a plaintiff’s factual allegations as true.” (citation

omitted)).

        In 2011, Cordaro purchased a lot in the Governor’s Club subdivision of Chapel

Hill where he intended to build a home. Cordaro paid $294,500 for the lot. He hired

an architect in May 2012 to design the planned residence. His contract with the




        1At some point during the time period relevant to this litigation, Harrington Bank was
acquired by Bank of North Carolina.

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architect provided that the completed house would consist of approximately 3,000

square feet and cost approximately $800,000 to build.

I.   Loan Application and Construction Appraisal

      In November 2012, Cordaro began looking for a lender to provide him with a

construction loan that could later be converted into a mortgage once the home was

built. He visited Harrington’s website and began filling out a loan application online.

Prior to completing the application, Cordaro called John MacDonald, a loan officer

employed by Harrington, to discuss the potential loan. During this conversation,

Cordaro informed MacDonald that if the value contained in Harrington’s internal

appraisal of the planned home was less than the price he paid for the lot plus the cost

of construction then he would not go forward with either the loan or the construction

of the house.

      Following his discussion with MacDonald, Cordaro signed a construction

contract with Brightleaf Development Company (“Brightleaf”) on 28 November 2012.

The contract listed the total cost to build the house as $835,359.       Cordaro and

Brightleaf also verbally agreed that if the house was not appraised at a value equal

to the cost of the lot plus the cost of construction then the home would not be built

and the contract would be void.

      On 4 December 2012, Cordaro submitted a loan application to Harrington

seeking a loan of $850,000. In connection with the loan application, MacDonald



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ordered an appraisal through Community Bank Real Estate Solutions (“CBRES”), an

appraisal management company. Along with his request, MacDonald submitted to

CBRES Cordaro’s construction contract, construction drawings, and the lot’s

purchase price. An appraiser named Danny Goodwin was assigned by CBRES to

appraise Cordaro’s prospective residence. On 10 December 2012, Goodwin appraised

the home at a value of $1,150,000.

      MacDonald emailed Goodwin’s appraisal (the “Construction Appraisal”) to

Cordaro on 12 December 2012. An hour after receiving the Construction Appraisal,

Cordaro sent an email to his architect informing him of the appraisal amount and

asking him to tell Brightleaf that construction could begin on the home.

      On 19 December 2012, MacDonald emailed Cordaro once again, informing him

that Harrington’s loan committee had approved his loan on the condition that

Cordaro put $100,000 in escrow as a cash reserve. Cordaro responded later that day,

asking why he was being asked to provide a cash reserve and inquiring whether this

requirement was a standard practice of Harrington’s. MacDonald replied that the

loan committee was concerned about the proposed residence’s high cost per square

foot. Cordaro then asked MacDonald if he should be concerned about the value of the

house. MacDonald responded that there was no reason for concern and told Cordaro

that the committee was simply being “overly cautious.” Cordaro refused to place




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$100,000 in escrow but instead offered to put down $58,000 in cash. Harrington

accepted this proposal.

       Harrington proceeded to conduct an internal review of the Construction

Appraisal.   On 21 December 2012, MacDonald signed an appraisal review form

stating his belief that the Construction Appraisal was a reasonable estimate of the

value of Cordaro’s home and that it complied with applicable regulatory

requirements. The review form was also signed by a second employee of Harrington

on 24 December 2013. Both reviews were required under Harrington’s Consumer &

Mortgage Loan Policy & Product Manual, which provided that every appraisal

received by Harrington “shall be reviewed for conformity with minimum regulatory

requirements” and that appraisals “with transactions in excess of $500,000 will

receive a secondary review by the Manager of Mortgage Lending.”

II.   Construction Loan Agreement

       On 29 January 2013, Cordaro submitted a second loan application that was

identical in all respects to the first application except that it provided for a decreased

loan amount of $777,250.        The following day, Cordaro signed a contract (the

“Construction Loan Agreement”) with Harrington.             This agreement contained

language stating as follows:

             Appraisal. If required by Lender, an appraisal shall be
             prepared for the Property, at Borrower’s expense, which in
             form and substance shall be satisfactory to Lender, in
             Lender’s sole discretion, including applicable regulatory


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               requirements.

       Construction began on the house in early 2013. The total acquisition and

construction cost of the property was ultimately $1,250,000.

III. Mortgage Appraisal

       As construction neared completion in late 2013, Cordaro began working with

MacDonald to refinance his construction loan and receive a permanent mortgage loan

from Harrington. Unbeknownst to Cordaro, Harrington planned to provide him with

a mortgage loan and then immediately sell the mortgage to Amerisave Mortgage

Company (“Amerisave”).

       In January 2014, Harrington ordered a new appraisal of Cordaro’s home for

purposes of the mortgage loan.     An individual named Luther Misenheimer was

assigned to conduct the new appraisal. On 28 January 2014, MacDonald emailed

Misenheimer a copy of Goodwin’s earlier Construction Appraisal, informing

Misenheimer that he should “[c]all if you need additional info.” Several hours later,

MacDonald emailed Misenheimer again and stated that “[w]e need a BIG

number . . . . . . .”

       Misenheimer ultimately declined to perform the appraisal for Harrington. The

appraisal was then reassigned to Goodwin. Goodwin issued his second appraisal (the

“Mortgage Appraisal”) on 10 February 2014, valuing the property at $1,250,000.




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      Upon receiving Goodwin’s Mortgage Appraisal, Harrington requested that

CBRES run the Mortgage Appraisal through the Uniform Collateral Data Portal

(“UCDP”), a system that performs independent automated risk assessments of

submitted appraisals. CBRES submitted the Mortgage Appraisal to the UCDP on 11

February 2014, and the system flagged ten separate flaws with the appraisal. Among

the flaws noted were the fact that (1) Goodwin’s valuation of Cordaro’s home was

“significantly different” than the sale price of a comparable property used by Goodwin

in arriving at his valuation; and (2) the three comparable properties utilized by

Goodwin in conducting his appraisal were not similarly situated to Cordaro’s home.

      Also in February 2014, Amerisave commissioned an outside company called

Clear Capital to perform a Collateral Desktop Analysis (“CDA”) of the Mortgage

Appraisal, which was conducted on 18 February 2014. The CDA valued Cordaro’s

home at $625,000 — exactly one-half the amount of the Mortgage Appraisal. The

CDA also highlighted many of the same flaws with the Mortgage Appraisal that were

noted by the UCDP.

      On 18 February 2014, an Amerisave employee emailed MacDonald to inform

him that Amerisave would not buy the loan from Harrington due to the results of the

CDA. MacDonald emailed a coworker on 26 February 2014, stating that “I think

[Cordaro’s] loan is dead but I’m going to restart with another lender tomorrow.” The




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other lender that MacDonald was referring to in his email was Sierra Pacific

Mortgage Company (“Sierra Pacific”).

      In late February or early March 2014, Cordaro became aware that Harrington

intended to sell his mortgage loan to another lender such that third-party approval

would be required in order to fund his loan. Nevertheless, Cordaro applied for a new

loan from Harrington in the proposed amount of $783,000 on 27 February 2014.

      Sierra Pacific hired an appraiser named Jan Faulkner to conduct an appraisal

of Cordaro’s home. On 10 March 2014, Faulkner valued the property at $800,000.

Following Faulkner’s appraisal, MacDonald emailed Cordaro new proposed financing

terms that consisted of a $600,000 mortgage loan and a $120,000 equity loan. On 21

March 2014, MacDonald emailed Cordaro the results of the CDA that had been

commissioned by Amerisave. In the email, MacDonald stated that “[w]e think this

appraisal is poor. We fought it and lost.”

      In mid-April 2014, Harrington informed Cordaro that it could not offer him the

permanent mortgage loan of $783,000 for which he had applied and could instead

only loan him approximately $600,000. In the meantime, the balloon payment on

Cordaro’s construction loan was due at the end of the month. Cordaro took out a

$600,000 loan from Sierra Pacific and covered the shortfall between the mortgage

loan and the amount due on the construction loan balloon payment by selling off




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several of his personal investments. On 18 April 2016, an appraiser commissioned

by Cordaro valued his property at $765,000.

IV. Lawsuit

      On 18 October 2016, Cordaro filed a complaint against Harrington in Chatham

County Superior Court alleging claims for negligence, negligent misrepresentation,

breach of contract, breach of the implied covenant of good faith and fair dealing, and

unfair and deceptive trade practices. Harrington filed an answer along with a motion

to dismiss pursuant to Rule 12(b)(6) of the North Carolina Rules of Civil Procedure

on 26 December 2016. Harrington also filed a third-party complaint against Goodwin

on 10 February 2017 in which it asserted claims for breach of contract, negligent

misrepresentation, indemnity, and contribution.

      On 8 August 2017, the Honorable Lindsay R. Davis, Jr. entered an order

granting Harrington’s motion to dismiss Cordaro’s complaint and also dismissing

Harrington’s third-party complaint against Goodwin as moot. Cordaro filed a timely

notice of appeal to this Court.

                                      Analysis

      Cordaro’s sole argument on appeal is that the trial court erred by granting

Harrington’s motion to dismiss. He contends that he has alleged viable claims for

relief based on Harrington’s actions in obtaining an appraisal that it should have

known contained an inflated valuation of his home.          He further asserts that



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                                     Opinion of the Court



Harrington was aware of the fact that he was relying upon the result of the appraisal

in deciding whether to go forward with the construction of the home and to take out

the accompanying loans. Finally, he contends that MacDonald had a conflict of

interest in that he was entitled to receive a commission if the loan was completed yet

Harrington nevertheless improperly allowed him to participate in the bank’s internal

review of the Construction Appraisal.2

              The standard of review of an order granting a Rule 12(b)(6)
              motion is whether the complaint states a claim for which
              relief can be granted under some legal theory when the
              complaint is liberally construed and all the allegations
              included therein are taken as true. On appeal, we review
              the pleadings de novo to determine their legal sufficiency
              and to determine whether the trial court’s ruling on the
              motion to dismiss was correct.

Feltman v. City of Wilson, 238 N.C. App. 246, 251, 767 S.E.2d 615, 619 (2014).

“Dismissal is proper when one of the following three conditions is satisfied: (1) the

complaint on its face reveals that no law supports the plaintiff’s claim; (2) the

complaint on its face reveals the absence of facts sufficient to make a good claim; or

(3) the complaint discloses some fact that necessarily defeats the plaintiff’s claim.”

Podrebarac v. Horack, Talley, Pharr, & Lowndes, P.A., 231 N.C. App. 70, 74, 752

S.E.2d 661, 663 (2013) (citation omitted).

I.   Negligence-Based Claims



       2Cordaro alleges that MacDonald ultimately received a commission of $5,829 in connection
with Harrington’s loan to Cordaro.

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     A. Negligence

      We first consider Cordaro’s argument that he successfully stated a claim for

negligence. He asserts that Harrington owed him a duty of care arising under either

the North Carolina Secure and Fair Enforcement Mortgage Licensing Act3 (the

“SAFE Act”) or general common law principles of negligence and that Harrington

breached this duty by failing to properly discover and inform him that the appraisal

amount was inflated. Cordaro further contends that he “justifiably relied on both the

Construction Appraisal and [Harrington’s] review and approval of that appraisal,

including after [Harrington] asked him to put more money down.”

      The essential elements of any negligence claim are “the existence of a legal

duty or standard of care owed to the plaintiff by the defendant, breach of that duty,

and a causal relationship between the breach of duty and certain actual injury or loss

sustained by the plaintiff.” Harris v. Daimler Chrysler Corp., 180 N.C. App. 551, 555,

638 S.E.2d 260, 265 (2006) (citation and quotation marks omitted). “[T]he first

prerequisite for recovery of damages for injury by negligence is the existence of a legal

duty, owed by the defendant to the plaintiff, to use due care. If no duty exists, there

logically can be neither breach of duty nor liability.”          Id. (internal citation and

quotation marks omitted). Furthermore, “[e]ven if a plaintiff can show circumstances

giving rise to a duty . . . , absent a sufficient allegation and showing of justifiable



      3   See N.C. Gen. Stat. § 53-244.010, et seq. (2017).

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reliance, a plaintiff’s negligence claims fail.” Arnesen v. Rivers Edge Golf Club &

Plantation, Inc., 368 N.C. 440, 449, 781 S.E.2d 1, 8 (2015) (citation omitted).

      As an initial matter, we note that this case does not involve the existence of a

fiduciary duty between Cordaro and Harrington. “A fiduciary duty generally arises

when one reposes a special confidence in another, and the other in equity and good

conscience is bound to act in good faith and with due regard to the interests of the

one reposing confidence.” Id. (citation and quotation marks omitted). Our Supreme

Court has made clear that “[o]rdinary borrower-lender transactions . . . are

considered arm’s length and do not typically give rise to fiduciary duties.” Dallaire

v. Bank of Am., N. A., 367 N.C. 363, 368, 760 S.E.2d 263, 266 (2014) (citation omitted).

Moreover, “the law does not typically impose upon lenders a duty to put borrowers’

interests ahead of their own.” Id. at 368, 760 S.E.2d at 267.

      Instead, Cordaro argues that a legal duty existed through the General

Assembly’s enactment of the SAFE Act. In addition to regulating the licensure status

of mortgage lenders, the SAFE Act also imposes certain duties upon them and

prohibits them from taking various specified actions in connection with mortgage

loans. The Act contains prefatory language stating that its primary purpose “is to

protect consumers seeking mortgage loans and to ensure that the mortgage lending

industry operates without unfair, deceptive, and fraudulent practices on the part of

mortgage loan originators.” N.C. Gen. Stat. § 53-244.020 (2017). Cordaro contends



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that Harrington violated subsections (1), (8), (11), and (14) of N.C. Gen. Stat. § 53-

244.111 — one of the statutes that comprise the SAFE Act.               Those subsections

provide, in pertinent part, as follows:

             [I]t shall be unlawful for any person in the course of any
             residential mortgage loan transaction:

                  (1)    To misrepresent or conceal the material facts or
                         make false promises likely to influence,
                         persuade, or induce an applicant for a mortgage
                         loan or a mortgagor to take a mortgage loan, or
                         to pursue a course of misrepresentation through
                         agents or otherwise.

                  ....

                  (8)    To engage in any transaction, practice, or course
                         of business that is not in good faith or fair dealing
                         or that constitutes a fraud upon any person in
                         connection with the brokering or making or
                         servicing of, or purchase or sale of, any mortgage
                         loan.

                  ....

                  (11) To improperly influence or attempt to improperly
                       influence the development, reporting, result, or
                       review of a real estate appraisal sought in
                       connection with a mortgage loan. . . .

                  ....

                  (14) To fail to comply with applicable State and
                       federal laws and regulations related to mortgage
                       lending or mortgage servicing.

N.C. Gen. Stat. § 53-244.111 (2017).



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        This Court ruled in Guyton v. FM Lending Servs., Inc., 199 N.C. App. 30, 681

S.E.2d 465 (2009), that North Carolina’s Mortgage Lending Act4 — the predecessor

statute to the SAFE Act — could serve as the source of a legal duty owed by a lender

to a borrower for purposes of a negligence claim. Id. at 44, 681 S.E.2d at 476. In that

case, the borrowers asserted claims for fraud, negligent misrepresentation, and

unfair and deceptive trade practices against their mortgage lender for failing to

disclose that their home was located in a flood hazard area. We reversed the trial

court’s dismissal of the borrowers’ claims, stating that “a legal duty of the type

claimed by Plaintiffs does exist under the North Carolina Mortgage Lending Act.” Id.

at 36, 681 S.E.2d at 471.

        In reaching this conclusion, we examined various provisions of the Act that

prohibited certain actions by lenders in connection with mortgage loans. Based on

the similarities between the Mortgage Lending Act and the SAFE Act, Cordaro

argues that our holding in Guyton recognizing the existence of a legal duty under the

Mortgage Lending Act applies equally to the SAFE Act.

        Even assuming — without deciding — that the SAFE Act can serve as the

source of a legal duty owed by a lender to a borrower in the residential loan context,

Cordaro is still required to have properly alleged justifiable reliance upon

Harrington’s actions in order to prevail on his negligence claim. Cordaro contends


        4See N.C. Gen. Stat. § 53-243.01, et seq., repealed by 2009 N.C. Sess. Laws 374, sec. 1 (effective
31 July 2009).

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that his complaint adequately alleged that he justifiably relied upon “both the

Construction Appraisal and [Harrington’s] review and approval of that appraisal” in

signing the Construction Loan Agreement on 30 January 2013. We disagree.

      In determining whether Cordaro sufficiently pled justifiable reliance, we find

instructive two cases from our appellate courts. Arnesen involved nineteen individual

investors who decided to invest in undeveloped real estate based upon allegedly faulty

appraisal information provided by a bank. Arnesen, 368 N.C. at 441, 781 S.E.2d at 3.

The investors brought an action against both the bank and its appraisers in which

they asserted, inter alia, claims for negligence, negligent misrepresentation, fraud,

and unfair and deceptive trade practices. Id. at 445, 781 S.E.2d at 6. In their

complaint, the plaintiffs alleged that “they would not have purchased [the] real

property but for [the] faulty appraisal information and that, in any event, the bank

should have discovered and disclosed the inflated appraised property values to them.”

Id. at 441, 781 S.E.2d at 3. However, the plaintiffs did not allege that they had

reviewed or inquired about the appraisal information prior to making the decision to

purchase or that their decision to buy the property was contingent upon the flawed

appraisals. Id.

      Our Supreme Court held that the bank was entitled to dismissal of all claims

due to the plaintiffs’ failure to sufficiently allege justifiable reliance. The Court

explained that “[r]eliance is not reasonable if a plaintiff fails to make any independent



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investigation, or fails to demonstrate he was prevented from doing so[.]” Id. at 449,

781 S.E.2d at 8 (internal citations and quotation marks omitted).             Rather, “to

establish justifiable reliance a plaintiff must sufficiently allege that he made a

reasonable inquiry into the misrepresentation and allege that he was denied the

opportunity to investigate or that he could not have learned the true facts by exercise

of reasonable diligence.” Id. at 454, 781 S.E.2d at 11 (citation, quotation marks,

brackets, and ellipsis omitted).     Consequently, the Supreme Court concluded as

follows:

             It is undisputed . . . that plaintiffs decided to purchase the
             investment properties without consulting an appraisal.
             Moreover, . . . [p]laintiffs have not alleged that they
             ordered, viewed, or requested appraisal information at any
             time, or that they were prevented from doing so.

Id. at 448, 781 S.E.2d at 7.

      In Fazarri v. Infinity Partners, LLC, 235 N.C. App. 233, 762 S.E.2d 237 (2014),

a group of real estate investors brought claims for negligence and negligent

misrepresentation against their lenders. Id. at 235, 762 S.E.2d at 239. The plaintiffs

purchased individual lots as part of a real estate development plan that were all

identically appraised at $500,000 — regardless of the lot’s specific characteristics or

location. The plaintiffs alleged that, in actuality, the true value of the lots “ranged

from $40,000-$81,000.” Id. at 235, 762 S.E.2d at 238. This Court upheld the trial

court’s grant of summary judgment for the lenders on the ground that the plaintiffs



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“forecast no evidence that they undertook their own independent inquiries into the

value of the lots (such as obtaining their own independent appraisals) or were

prevented from doing so.” Id. at 241, 762 S.E.2d at 242. Therefore, we concluded that

the plaintiffs could not demonstrate justifiable reliance. Id.

       While we are mindful of the fact that we must accept all of Cordaro’s

allegations as true for purposes of this appeal from the trial court’s Rule 12(b)(6)

order, his allegations fail to satisfy the requirement of justifiable reliance.5 Prior to

completing a loan application with Harrington, Cordaro had already purchased a lot

in the Governor’s Club subdivision, hired an architect, and signed a construction

contract with a builder. Within an hour of receiving the Construction Appraisal from

MacDonald, Cordaro took steps to inform his builder that construction could begin on

the house. Furthermore, he made no additional inquiries to anyone other than

MacDonald to confirm the accuracy of Goodwin’s Construction Appraisal prior to

signing the Construction Loan Agreement on 30 January 2013.                    In short, the

allegations in his complaint fail to show that he either engaged in any type of

independent inquiry as to the validity of the appraisal value or that he was in any

way prevented from doing so.

       Cordaro contends that the present case is distinguishable from Arnesen and

Fazarri because he — unlike the plaintiffs in those cases — has alleged that he


       5 We note that Arnesen — like the present case — involved an appeal from a trial court’s
dismissal of a complaint under Rule 12(b)(6).

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actually did rely upon the Construction Appraisal in entering into the Construction

Loan Agreement. It is true that the Arnesen and Fazarri plaintiffs did not allege

their decisions to purchase the properties at issue in those cases were contingent upon

their review of their lenders’ appraisals. Nevertheless, both cases make clear that in

order to demonstrate justifiable reliance Cordaro was required to allege either that

he undertook his own independent inquiry regarding the validity of the Construction

Appraisal or that he was somehow prevented from doing so. For this reason, we hold

that the trial court did not err in dismissing his negligence claim.6

     B. Negligent Misrepresentation

       It is well established that “the tort of negligent misrepresentation occurs when

(1) a party justifiably relies, (2) to his detriment, (3) on information prepared without

reasonable care, (4) by one who owed the relying party a duty of care.” Walker v.

Town of Stoneville, 211 N.C. App. 24, 30, 712 S.E.2d 239, 244 (2011) (citations,

quotation marks, and brackets omitted).                 Having already determined that the

allegations in Cordaro’s complaint failed to demonstrate justifiable reliance, we

likewise hold that this same defect bars his negligent misrepresentation claim.

     C. Negligent Supervision

       In his appellate brief, Cordaro further contends that the trial court erred in



       6   In light of our ruling that Cordaro has failed to plead facts supporting the existence of
justifiable reliance, we need not address Cordaro’s alternative argument that Harrington breached a
duty it owed to him under common law principles of negligence.

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dismissing his claim against Harrington for negligent supervision of MacDonald.

However, Cordaro did not assert such a claim in his complaint. Although North

Carolina recognizes the doctrine of notice pleading, see Haynie v. Cobb, 207 N.C. App.

143, 148-49, 698 S.E.2d 194, 198 (2010), a plaintiff is still required to expressly allege

in his complaint the specific claims for relief that it is asserting against the defendant.

See Curl v. Am. Multimedia, Inc., 187 N.C. App. 649, 656, 654 S.E.2d 76, 81 (2007)

(“[N]one of the three causes of action proposed by Plaintiffs were asserted in their

complaint. . . . This Court has long held that issues and theories of a case not raised

below will not be considered on appeal.” (citations, quotation marks, and brackets

omitted)).   Accordingly, we do not consider Cordaro’s arguments as to negligent

supervision.

II.   Contract-Based Claims

      A. Breach of Contract

       In addition to asserting claims grounded in negligence, Cordaro’s complaint

also contains two contract-based claims.            Primarily, Cordaro contends that

Harrington “breached the Construction Loan Agreement in failing to ensure that the

Construction Appraisal complied with [the Uniform Standards of Professional

Appraisal Practice] and various other state and federal appraisal requirements.”

       The elements of a claim for breach of contract are “(1) existence of a valid

contract and (2) breach of the terms of that contract.” Johnson v. Colonial Life &



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Accident Ins. Co., 173 N.C. App. 365, 369, 618 S.E.2d 867, 870 (2005) (citation and

quotation marks omitted). “[W]here the complaint alleges each of these elements, it

is error to dismiss a breach of contract claim under Rule 12(b)(6).”                    Woolard v.

Davenport, 166 N.C. App. 129, 134, 601 S.E.2d 319, 322 (2004) (citation omitted).

       Cordaro’s breach of contract claim is based upon the following provision

contained in the Construction Loan Agreement:

               Appraisal. If required by Lender, an appraisal shall be
               prepared for the Property, at Borrower’s expense, which in
               form and substance shall be satisfactory to Lender, in
               Lender’s sole discretion, including applicable regulatory
               requirements.

       Harrington asserts that this language did not create any contractual duty on

its part toward Cordaro. We agree.

       By the plain terms of this provision of the Construction Loan Agreement, the

preparation of any appraisal was for the sole benefit of Harrington. Moreover, the

contractual language further provided that any appraisal prepared “shall be

satisfactory to Lender, in Lender’s sole discretion[.]” This language reinforces the

notion that Harrington was under no contractual obligation to Cordaro to ensure the

accuracy of the Construction Appraisal. Rather, any appraisal commissioned by

Harrington was entirely for its own internal use.7


       7 Cordaro contends that the phrase “including applicable regulatory requirements” supports
his argument on this issue. However, while the precise meaning of this phrase in the context of this
contractual provision is unclear, its inclusion does not alter the fact that the document is devoid of



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       For these reasons, we conclude that Cordaro’s breach of contract claim fails as

a matter of law. Therefore, it was properly dismissed by the trial court.

     B. Breach of Implied Covenant of Good Faith and Fair Dealing

       The invalidity of Cordaro’s breach of contract claim on these facts is likewise

fatal to his claim for breach of the implied covenant of good faith and fair dealing.

Under North Carolina law, every contract contains “an implied covenant of good faith

and fair dealing that neither party will do anything which injures the right of the

other to receive the benefits of the agreement.” Bicycle Transit Auth. v. Bell, 314 N.C.

219, 228, 333 S.E.2d 299, 305 (1985) (citation and quotation marks omitted). See

Maglione v. Aegis Family Health Ctrs., 168 N.C. App. 49, 56, 607 S.E.2d 286, 291

(2005) (“In addition to its express terms, a contract contains all terms that are

necessarily implied to effect the intention of the parties and which are not in conflict

with the express terms.” (citation and quotation marks omitted)).

       As a general proposition, where a party’s claim for breach of the implied

covenant of good faith and fair dealing is based upon the same acts as its claim for

breach of contract, we treat the former claim as “part and parcel” of the latter.

Murray v. Nationwide Mut. Ins. Co., 123 N.C. App. 1, 19, 472 S.E.2d 358, 368 (1996),

disc. review denied, 345 N.C. 344, 483 S.E.2d 172-73 (1997); see Suntrust Bank v.

Bryant/Sutphin Props., LLC, 222 N.C. App. 821, 833, 732 S.E.2d 594, 603 (“As the


language conferring upon Harrington any contractual obligation to Cordaro with respect to appraisals
required by the bank.

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                           CORDARO V. HARRINGTON BANK

                                   Opinion of the Court



jury determined that plaintiff did not breach any of its contracts with defendants, it

would be illogical for this Court to conclude that plaintiff somehow breached implied

terms of the same contracts.”), disc. review denied, 366 N.C. 417, 735 S.E.2d 180

(2012).

      Here, the basis for Cordaro’s claim that Harrington breached the implied

covenant of good faith and fair dealing is identical to the basis for his breach of

contract claim. Therefore, the trial court properly dismissed this claim as well.

III. Unfair and Deceptive Trade Practices Claim

      Finally, Cordaro argues that the trial court erred in granting Harrington’s

motion to dismiss his unfair and deceptive trade practices claim pursuant to Chapter

75 of the North Carolina General Statutes. Once again, we disagree.

      N.C. Gen. Stat. § 75-1.1 provides, in relevant part, that “[u]nfair methods of

competition in or affecting commerce, and unfair or deceptive acts or practices in or

affecting commerce, are declared unlawful.” N.C. Gen. Stat. § 75-1.1(a) (2017). It is

well established that “[a] claim of unfair and deceptive trade practices under section

75-1.1 of the North Carolina General Statutes requires proof of three elements: (1) an

unfair or deceptive act or practice, (2) in or affecting commerce, which (3) proximately

caused actual injury to the claimant.” Nucor Corp. v. Prudential Equity Grp., LLC,

189 N.C. App. 731, 738, 659 S.E.2d 483, 488 (2008) (citation omitted). Our Supreme

Court has held that “a claim under section 75-1.1 stemming from an alleged



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                           CORDARO V. HARRINGTON BANK

                                  Opinion of the Court



misrepresentation . . . require[s] a plaintiff to demonstrate reliance on the

misrepresentation in order to show the necessary proximate cause.” Bumpers v.

Cmty. Bank of N. Va., 367 N.C. 81, 88, 747 S.E.2d 220, 226 (2013).

             We previously likened such burden of proof to that of the
             detrimental reliance requirement under a fraud claim. In
             making this inquiry we examine the mental state of the
             plaintiff. Two key elements specific to the plaintiff combine
             to determine detrimental reliance: (1) actual reliance and
             (2) reasonable reliance.

Id. at 89, 747 S.E.2d at 227 (internal citation and quotation marks omitted).

      As discussed above, Cordaro has failed to sufficiently allege that he reasonably

relied on the Construction Appraisal. Therefore, he cannot satisfy the elements of a

claim under N.C. Gen. Stat. § 75-1.1. Accordingly, the trial court did not err in

dismissing this claim.

                                    Conclusion

      For the reasons stated above, we affirm the trial court’s 8 August 2017 order.

      AFFIRMED.

      Judges STROUD and BERGER concur.




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