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Steven Hester Hall appealed from a decision granting defendant’s motion to dismiss Hall’s claims for breach of fiduciary duty, breach of insurance licensing, bank fraud, insurance fraud, breach of implied covenant of good faith and fair dealing, harassment, and unfair and deceptive trade practices. .
IN Steven Hester Hall v. Brunswick Plantation Property Owners Association, Greg Mayol, Cathy Six and Community Association Management ServicesNo. COA21-748, 2022-NCCOA-604, Court of Appeals of North Carolina (September 6, 2022) Hall wanted to build a house without the bond required by Community Association regulations.
ACTUAL BACKGROUND
Hall is a general contractor and CEO of Eco Lakes Construction, LLC. Eco Lakes owns property at 649 Covington Drive NW, Calabash, NC (“Property”), in the Brunswick Plantation and Golf Course Community (“Community”). Defendants are Brunswick Plantation Property Owners Association (“Association”); Community Association Management, the association’s property management company; Greg Mayol, Community Association Manager for the community; and Cathy Six, the administrator of the Architectural Standards Committee for the association.
Contract Performance and Master Deportment Agreement (“Master Deportment Agreement”) is a contract between the Architectural Standards Committee and a general contractor on a community construction project. The Master Deportment Agreement requires the General Contractor to provide the Association with a bond of $5,000 to be held as security for the completion of the construction project in accordance with the Association’s governing documents—the Brunswick Plantation Architectural Plan and Residential Design and Construction Standards, and the Amended and Restated Brunswick Master Declaration and Development Plan Plantation.
Plaintiff submitted plans to build a home on the property but did not provide the $5,000 Contractor Compliance Bond required by the Master Deportment Agreement. The defendants refused to act on the plaintiff’s construction proposal until he bailed. The plaintiff applied for a waiver of the bond; The defendants declined to issue a waiver. The plaintiff again refused to provide the bond, and the defendants directed the plaintiff to cease construction on the lot.
On April 23, 2021, the plaintiff sued Hall and filed a motion for a temporary restraining order and a motion for a preliminary injunction against the defendants. The District Court rejected the request for a temporary restraining order.
In an amended complaint, Hall alleged breach of fiduciary duty, insurance license violations, bank fraud, insurance fraud, breach of the implied covenant of good faith and fair dealing, harassment and unfair and deceptive trade practices. The defendants moved to dismiss as amended. Hall moved to amend his complaint to add an additional cause of action and an additional defendant, and an objection to the defendants’ motion to dismiss. The district court granted the defendants’ motion to dismiss on July 29, 2021.
DISCUSSION
In considering a motion to dismiss, the court must construe the allegations liberally and the court should not dismiss the complaint unless it appears beyond a reasonable doubt that the plaintiff could prove no set of facts in support of his claim that would entitle him to relief.
The caption of the plaintiff’s complaint indicates that he brought suit for breach of fiduciary duty, insurance license violations, bank fraud, insurance fraud, breach of implied covenants of good faith and fair dealing, harassment, and unfair and deceptive trade practices. The suit indicates only that Hall is questioning the propriety of the supplier’s compliance bond as required by the Master Deportment Agreement. Hall failed to state a claim upon which relief may be granted under any legal theory.
Standing
For a court to have substantive jurisdiction to hear a claim, the party who brought the action must have standing. Standing means that the party has a sufficient stake in an otherwise legal dispute to obtain a legal resolution of that dispute. Any claim must be brought in the name of the real party in interest. A real stakeholder is a party who benefits or is harmed by the judgment in the case. Lack of standing may be contested by motion to dismiss for failure to state a claim upon which relief may be granted.
The court noted that Hall appeared to argue that the amended and restated master declaration and development plan for Brunswick Plantation was unenforceable because it is ambiguous and is a restrictive covenant on the property. The plaintiff does not own the property, nor does it have any protected legal interest in the property. He therefore lacked standing to bring this action.
In the alternative, the district court dismissed the plaintiff’s motions because the plaintiff lacked standing to bring the action on behalf of Eco Lakes. In North Carolina, a corporation must be represented by a duly admitted and licensed attorney and cannot proceed pro se.
There is nothing here to indicate that the plaintiff is a registered lawyer. Rather, the plaintiff is a general contractor and is the president and CEO of Eco Lakes. To the extent that the Claimant purports to bring a claim on behalf of Eco Lakes, it may not do so.
The district court’s decision to dismiss the plaintiff’s complaint was upheld.
This case is an example of the abuse of a lawsuit by allegations of insurance fraud and bad faith that were unrelated to the issue at hand. To avoid paying a minimum bond of $5,000, Hall fled the arraignment, claiming he wanted to build a house, and charged the defendants with multiple torts and the crime of insurance fraud because they insisted he post bail. He had no position and was, if anything, trying to smear the defendants and get them to retain their counsel and defend this false allegation. The Court of Appeals refused to honor his plan and should have sanctioned him for bringing the case without standing.
(c) 2022 Barry Zalma & ClaimSchool, Inc.
Barry Zalma, Esq., CFE, now limits his practice to serving as an insurance consultant specializing in insurance coverage, insurance claims management, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He practiced law in California for more than 44 years as an insurance coverage and claims attorney and more than 54 years in the insurance industry. He is available at and zalma@zalma.com.
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