An unpublished opinion of the North Carolina Court of Appeals does not constitute
controlling legal authority. Citation is disfavored, but may be permitted in accordance
with the provisions of Rule 30(e)(3) of the North Carolina Rules of Appellate Procedure.



                                NO. COA13-718
                       NORTH CAROLINA COURT OF APPEALS

                                Filed:    18 March 2014


RABUN COUNTY BANK,
     Plaintiff

      v.                                      Jackson County
                                              No. 12 CVS 344
HIGHLANDS LAND HOLDING
GROUP, LLC, CANDACE L.
DELAPP & JOSEPH K. DELAPP,
     Defendants


      Appeal by defendants from judgment entered 19 February 2013

by   Judge   J.   Thomas    Davis    in    Jackson   County     Superior    Court.

Heard in the Court of Appeals 20 November 2013.


      Law Offices of Kenneth W. Fromknecht, II PA, by Kenneth W.
      Fromknecht, II, for plaintiff-appellee.

      David R. Payne, P.A., by David R. Payne, for defendant-
      appellants.


      CALABRIA, Judge.


      Highlands Land Holding Group, LLC (“Highlands”), Candace L.

DeLapp (“Candace”) and Joseph K. DeLapp (“Joseph”)(collectively

“defendants”) appeal from the trial court’s entry of summary

judgment     in   favor    of    Rabun    County   Bank   (“plaintiff”).          We

affirm.
                                               -2-
                                       I. Background

       In   January       2006,    Candace,          who    was   a     member-manager       of

Highlands, and her husband Joseph applied to plaintiff for a

$414,000.00        loan    to     be    used     by    Highlands           to   acquire    real

property.         On 15 February 2006,                 Candace and Joseph executed

personal guaranties for this loan.                         Joseph’s guaranty indicated

that   it       applied    to     Highlands’          present     and       future   debt    to

plaintiff.         The loan was also secured by a deed of trust in

favor of plaintiff.

       On   1    March    2007,        Candace       and    fellow      Highlands     member-

manager     Anthony       Shane    Owl-Greason          (“Owl-Greason”)           executed    a

promissory        note    on    behalf     of        Highlands        in    the   amount     of

$587,000.00.         Candace       and    Owl-Greason          also     executed     personal

guaranties in connection with this note.                          As a result of this

transaction, the deed of trust securing the original $414,000.00

loan was cancelled.

       On 25 September 2007, Candace and Owl-Greason executed a

third promissory note on behalf of Highlands, this time in the

amount      of   $155,000.00.            They     again       each      executed     personal

guaranties in connection with this note.

       Highlands subsequently failed to make the required payments

on both of the 2007 notes.                     Consequently, on 12 April 2010,
                                            -3-
plaintiff    initiated         an   action      against     defendants       in    Jackson

County    Superior    Court,          seeking     payment    of    $528,703.85         plus

interest    and    fees    from       all   defendants      and    $110,473.46         plus

interest     and   fees        from    Highlands      and     Candace        (“the     2010

action”).     Owl-Greason was not named as a defendant in the 2010

action because he had declared bankruptcy.

    The parties conducted a settlement conference, and on 24

January 2011, they entered into a settlement agreement, whereby

defendants would execute a new promissory note to plaintiff in

the amount of $663,121.39 in exchange for dismissal of the 2010

action    (“the    settlement         agreement”     or     “the   agreement”).         The

settlement    agreement         was     executed     by     Candace     in     both    her

personal capacity and as member-manager of Highlands, by Joseph

in his individual capacity, and by defendants’ attorney.                               The

agreement stated that it was “entered into freely, voluntarily

and with the full representation of counsel for all parties[.]”

    Pursuant to the settlement agreement, defendants executed

the new promissory note on 9 February 2011.                    In 2012, defendants

failed to make the payments required by this new note.                               On 31

May 2012, plaintiff initiated a new action against defendants,

seeking     payment       of    $652,382.47,        plus     interest        and      fees.

Defendants filed an answer with several affirmative defenses and
                                          -4-
counterclaims,        including,      inter     alia,       plaintiff’s       alleged

violation       of   the    Equal     Credit    Opportunity       Act       (“ECOA”),

nondisclosure of the creditworthiness of Owl-Greason, duress,

and lack of sufficient consideration.

       Plaintiff filed a motion for summary judgment as to its

claims and defendants’ affirmative defenses and counterclaims.

On 18 February 2013, the trial court conducted a hearing on

plaintiff’s motion.           The next day, the trial court entered a

“Final    Judgment”    which      granted   summary     judgment       in    favor   of

plaintiff on all claims and counterclaims.                  Defendants appeal.

                            II.    Standard of Review

       “Our standard of review of an appeal from summary judgment

is de novo; such judgment is appropriate only when the record

shows that ‘there is no genuine issue as to any material fact

and that any party is entitled to a judgment as a matter of

law.’” In re Will of Jones, 362 N.C. 569, 573, 669 S.E.2d 572,

576 (2008)(quoting Forbis v. Neal, 361 N.C. 519, 524, 649 S.E.2d

382,    385     (2007)).      “When   considering       a    motion    for    summary

judgment, the trial judge must view the presented evidence in a

light    most    favorable    to    the   nonmoving     party.”       Id.   (internal

quotations and citation omitted).

                     III.    Equal Credit Opportunity Act
                                          -5-
      Defendants argue that the trial court erred by granting

summary judgment in favor of plaintiff as to their affirmative

defense and counterclaim under the ECOA.              We disagree.

      Pursuant to the ECOA, “a creditor shall not require the

signature of an applicant’s spouse or other person, other than a

joint   applicant,     on     any   credit      instrument    if       the   applicant

qualifies under the creditor’s standards of creditworthiness for

the   amount   and    terms    of   the    credit   requested.”         12   C.F.R.   §

202.7(d)(1) (2013).         Moreover,

           [i]f,   under  a   creditor’s   standards  of
           creditworthiness, the personal liability of
           an additional party is necessary to support
           the credit requested, a creditor may request
           a cosigner, guarantor, endorser, or similar
           party. The applicant’s spouse may serve as
           an additional party, but the creditor shall
           not   require   that   the   spouse   be  the
           additional party.

Id. § 202.7(d)(5).          In the instant case, Joseph averred in his

affidavit opposing summary judgment that plaintiff required him

to execute a guaranty on 9 April 2007 in order to secure the

promissory     note    executed      by      Highlands   on        1    March   2007.

Defendants contend that this guaranty violated the ECOA.

      However, even considering Joseph’s affidavit in the light

most favorable to defendants, there was no evidence presented

that the guaranty he executed on 9 April 2007 provided the basis
                                              -6-
for his indebtedness to plaintiff.                        The complaint in the 2010

action sought payment from Joseph specifically on the basis of

the   guaranty    that       he    executed         on    15     February      2006.     This

guaranty was in conjunction with a loan that both Candace and

Joseph applied for in January 2006.                         In the 15 February 2006

guaranty, Joseph “absolutely and unconditionally guarantee[d] to

[plaintiff]     the    payment       and      performance         of    the    [$414,000.00

loan]      including    all       renewals,         extensions,        refinancings       and

modifications”         and    further          promised           to    “absolutely       and

unconditionally        guarantee         to      [plaintiff]           the     payment    and

performance      of    each       and     every          debt,    of    every     type    and

description, that [Highlands] may now or at any time in the

future owe [plaintiff] . . . .” (Emphasis added).                             This language

was sufficiently broad to cover the subsequent promissory notes

obtained in 2007 by Highlands.

      Thus, the uncontroverted evidence below is that plaintiff

only sought to collect Highlands’ debts from Joseph on the basis

of the guaranty he executed on 15 February 2006, and that Joseph

was   an    applicant    for       the    loan      for     which      he     executed   that

guaranty.      As a result, the ECOA was not implicated by plaintiff

attempting to collect on the 15 February 2006 guaranty.                                See 12

C.F.R.     §   202.7(d)(1)        (“[A]       creditor         shall    not    require    the
                                        -7-
signature of an applicant’s spouse or other person, other than a

joint applicant . . . .”)(emphasis added)).                This argument is

overruled.

                               IV.    Nondisclosure

      Defendants argue that the trial court erred by granting

summary    judgment     in    favor   of   plaintiff   because   there   was   a

genuine issue of material fact as to whether plaintiff failed to

disclose       that      Owl-Greason’s        financial     situation       was

deteriorating.        We disagree.

      Our Supreme Court has stated that

            [i]f the creditor knows or has good grounds
            for believing that the surety is being
            deceived or misled, or that he was induced
            to enter into the contract in ignorance of
            facts materially increasing the risk, of
            which he has knowledge, and he has an
            opportunity     before      accepting   his
            undertaking, to inform him of such facts,
            good and fair dealing demand that he should
            make such disclosure to him; and if he
            accepts the contract without doing so, the
            surety may afterwards avoid it.

Construction Co. v. Crain and Denbo, Inc., 256 N.C. 110, 120,

123   S.E.2d   590,     598    (1962)(internal    quotations     and   citation

omitted).      In the instant case, defendants contend that there

was a genuine issue of material fact regarding whether plaintiff

“withheld or otherwise failed to speak with respect to Mr. Owl-

Greason’s diminishing economic viability, wherefore this factual
                                             -8-
omission materially and unfairly increased the risks undertaken

by each of the Defendants in obligating themselves under the

notes or guaranties in question.”

      Even    assuming,        arguendo,          that     defendants’         argument        is

correct,     it   does    not    entitle          them    to    relief    in    this        case.

Plaintiff is seeking to recover from defendants based upon a

promissory note which was executed on 9 February 2011.                                       Owl-

Greason was not a party to this note and so any information

regarding     his      financial       condition          could     not     have    affected

defendants’       decision      to   execute       it.         Defendants’      allegations

regarding     nondisclosure          would         only     be     applicable          to     the

underlying notes executed prior to the 2011 promissory note.

Defendants have settled any claims regarding those notes and

cannot use possible defenses to those notes as defenses to the

new   note   in     the   instant      case.         Since       defendants        failed      to

provide any evidence that plaintiff failed to disclose material

information prior to their execution of the 2011 note that is

the   subject     of    this    case,       the    trial       court   properly        granted

summary judgment as to this issue.                   This argument is overruled.

                                       V.    Duress

      Defendants argue that the trial court erred by granting

summary    judgment       in   favor    of        plaintiff       because      there    was     a
                                        -9-
genuine issue of material fact as to whether defendants executed

the settlement agreement under duress.                We disagree.

             Duress exists when a person, by an unlawful
             or wrongful act of another is induced to
             make a contract or perform or forego some
             act under circumstances which deprive him of
             the exercise of free will.       An act is
             wrongful if made with the corrupt intent to
             coerce a transaction grossly unfair to the
             victim and not related to the subject of
             such proceedings. Generally, actions taken
             by a person voluntarily will not be said to
             be given under duress.

Reynolds v. Reynolds, 114 N.C. App. 393, 398-99, 442 S.E.2d 133,

136 (1994)(internal quotations and citations omitted).

      In the instant case, Joseph averred that he and Candace

attended the settlement meeting for the 2010 action, but that

defendants’ legal counsel was not present during the meeting.

Defendants contend that the absence of legal counsel allowed

members     of    plaintiff’s    management      to    coerce    defendants    into

entering     into    the   settlement       agreement       against    their   will.

However,     the     record     reflects      that    the    written    settlement

agreement was entered into by both defendants and their counsel,

and the agreement specifically states that it was “entered into

freely, voluntarily and with the full representation of counsel

for   all        parties[.]”        Since      this     evidence       conclusively

establishes that defendants had the advice and approval of their
                                        -10-
legal counsel regarding the settlement, Joseph’s statement that

defendants were not represented by counsel during the settlement

meeting does not create a genuine issue of material fact as to

whether they were under duress when they actually executed the

agreement.     This argument is overruled.

                             VI.    Consideration

    Finally, defendants argue that the trial court erred by

granting summary judgment in favor of plaintiff because there

was a genuine issue of material fact as to whether Joseph’s

execution     of   the    settlement          agreement       was     supported      by

consideration.     We disagree.

    Our Supreme Court has stated that “there is consideration

if the promisee, in return for the promise, does anything legal

which he is not bound to do, or refrains from doing anything

which he has a right to do, whether there is any actual loss or

detriment to him or actual benefit to the promisor or not.”

Penley   v.    Penley,      314    N.C.       1,   14,    332       S.E.2d    51,     59

(1985)(internal    quotations       and       citations       omitted).        In    the

settlement     agreement,    plaintiff         agreed    to     dismiss      the    2010

action against defendants in exchange for the execution of a new

promissory note.         This exchange of promises was adequate to

establish     consideration       for   the    settlement        agreement.          See
                                            -11-
Howell v. Butler, 59 N.C. App. 72, 75, 295 S.E.2d 772, 774

(1982)(holding that a promissory note was supported by valid

consideration        because,       inter    alia,    “the    promissory     note   was

signed    to    forestall       a    suit    by    the    defendants    against     the

plaintiffs, and the deed of trust securing the note was part of

that     negotiated     settlement.”).               Accordingly,    there    was    no

genuine issue of material fact as to whether the settlement

agreement      was   supported       by     consideration.       This   argument     is

overruled.

                                    VII.    Conclusion

       Joseph’s execution of a guaranty on 15 February 2006, which

provided the basis for his indebtedness to plaintiff in the 2010

action, did not implicate the ECOA.                      Defendants have failed to

demonstrate any genuine issues of material fact regarding their

defenses of nondisclosure, duress, and lack of consideration as

to the settlement agreement executed in 2011.                       Thus, the trial

court properly granted summary judgment in favor of plaintiff.

The trial court’s order is affirmed.

       Affirmed.

       Judges HUNTER, Robert C. and HUNTER, Jr., Robert N. concur.

       Report per Rule 30(e).
