constructive fraud claim in North Carolina

2017The North Carolina Supreme Court has defined the elements of a constructive fraud claim as proof of circumstances "(1) which created the relation of trust and confidence, and (2) led up to and surrounded the consummation of the transaction in which defendant is alleged to have taken advantage of his position of trust to the hurt of plaintiff." Terry v. Terry , 302 N.C. 77 , 83, 273 S.E.2d 674 , 677 (1981) (quotation marks, citations, and brackets omitted).

2017The North Carolina Supreme Court has defined the elements of a constructive fraud claim as proof of circumstances "(1) which created the relation of trust and confidence, and (2) led up to and surrounded the consummation of the transaction in which defendant is alleged to have taken advantage of his position of trust to the hurt of plaintiff." Terry v. Terry , 302 N.C. 77 , 83, 273 S.E.2d 674 , 677 (1981) (quotation marks, citations, and brackets omitted).

2025“The primary difference between pleading a claim for constructive fraud and one for breach of fiduciary duty is the constructive fraud requirement that the defendant benefit himself.” Id. 9 The Court declines to dismiss these claims without prejudice.

2024See id. at 294–95, 603 S.E.2d at 156 (“Since we have already found sufficient allegations of a fiduciary relationship, the controlling issue as to the constructive fraud claim is whether the complaint sufficiently alleges a wrongful benefit”).

2016App. 19, 28 , 560 S.E.2d 817, 823 (2002) (stating that to prove a constructive fraud claim, “a plaintiff must show (1) the existence of a fiduciary duty”).

2015App. 19, 28 , 560 S.E.2d 817, 823 (2002) (existence of “fiduciary” relationship is essential element of a constructive fraud claim) (citation omitted). {38} “Although our courts have broadly defined fiduciary relationships, no such relationship arises absent the existence of dominion and control by one party over another.” Kaplan v. O.K.

2019Constructive Fraud A constructive fraud claim requires a plaintiff to allege and show (1) that the defendant “owes the plaintiff a fiduciary duty;” (2) that the defendant “breached” that duty; and, (3) that the defendant “sought to benefit himself in the transaction.” Crumley & Assocs., P.C. v. Charles Peed & Assocs., P.A., 219 N.C.

2019App. 283, 294 , 603 S.E.2d 147, 156 (2004) (“The primary difference between pleading a claim for constructive fraud and one for breach of fiduciary duty is the constructive fraud requirement that the defendant benefit himself.”); Crumley & Assocs., P.C. v. Charles Peed & Assocs., P.A., 219 N.C.

2020App. 1, 10 , 487 S.E.2d 807, 813 (1997) (“The elements of a constructive fraud claim are proof of circumstances, (1) which created the relation of trust and confidence, and (2) led up to and surrounded the consummation of the transaction in which defendant is alleged to have taken advantage of his position of trust to the hurt of plaintiff.”) (emphasis added) (citation and internal quotation marks omitted). 64.

2018App. 595 , 599–600, 534 S.E.2d 233, 236 (2000) (“The elements of a constructive fraud claim are proof of circumstances ‘(1) which created the relation of trust and confidence, and (2) led up to and surrounded the consummation of the transaction in which defendant is alleged to have taken advantage of his position of trust to the hurt of plaintiff.’” (quoting Estate of Smith, 127 N.C.

2016See Barger v. McCoy Hillard & Parks, 346 N.C. 650, 666 , 488 S.E.2d 215, 224 (1997) (holding that the plaintiffs’ constructive-fraud claim failed because there was no “relationship of trust and confidence”).

2016See Barger v. McCoy Hillard & Parks, 346 N.C. 650, 666 , 488 S.E.2d 215, 224 (1997) (holding that the plaintiffs’ constructive-fraud claim failed because there was no “relationship of trust and confidence”).

2025To establish a constructive fraud claim, a plaintiff must allege: “(1) facts and circumstances creating a relation of trust and confidence; (2) which surrounded the consummation of the transaction in which the defendant is alleged to have taken advantage of the relationship; and (3) the defendant sought to benefit himself in the transaction.” Self v. Yelton, 201 N.C.

2022To establish a constructive fraud claim, a plaintiff must allege: “(1) facts and circumstances creating a relation of trust and confidence; (2) which surrounded the consummation of the transaction in which the defendant is alleged to have taken advantage of the relationship; and (3) the defendant sought to benefit himself in the transaction.” Self v. Yelton, 201 N.C.

2021After the trial court granted summary judgment in the nephew’s favor, id. at 523 , this Court held, in connection with the plaintiff’s constructive fraud claim, that, “[w]hen, as here, the superior party obtains a possible benefit through the alleged abuse of the confidential or fiduciary relationship, the aggrieved party is entitled to a presumption that constructive fraud occurred,” id. at 529 (citation omitted), with this presumption arising “not so much because the fiduciary has committed a fraud, but because he may have done so,” id. (cleaned up).

2021After the trial court granted summary judgment in the nephew’s favor, id. at 523 , this Court held, in connection with the plaintiff’s constructive fraud claim, that, “[w]hen, as here, the superior party obtains a possible benefit through the alleged abuse of the confidential or fiduciary relationship, the aggrieved party is entitled to a presumption that constructive fraud occurred,” id. at 529 (citation omitted), with this presumption arising “not so much because the fiduciary has committed a fraud, but because he may have done so,” id. (cleaned up).

2020App. 10, 16 , 796 S.E.2d 391, 395 (2017) (“The primary difference between pleading a claim for constructive fraud and one for breach of fiduciary duty is the constructive fraud requirement that the defendant benefit himself.” (quoting White v. Consol.

2019App. 10, 16 , 796 S.E.2d 391, 395 (2017) (“The primary difference between pleading a claim for constructive fraud and one for breach of fiduciary duty is the constructive fraud requirement that the defendant benefit himself.” (citation and quotations omitted)); Trillium Ridge Condo.

2020App. at 668 , 347 S.E.2d at 866 (In describing the evidence necessary to support a constructive fraud claim against a real estate agent the court held: “the only proof required to raise a jury issue and put the burden on the defendants to show that they acted openly, honestly and in good faith and took no advantage of plaintiffs is that (1) defendants were plaintiffs’ agents in looking for a house to buy; (2) plaintiffs told defendants they wanted to buy the [seller’s] house; (3) defendants later took title to the house and deeded it to plaintiffs; and (4) defendants did not obtain plaintiffs’

2013See id. (“Because we have already held that the issue of constructive fraud was properly submitted to the jury, defendant’s argument that the UDTP claim is improper must fail.”).

2018App. 595 , 599–600, 534 S.E.2d 233, 236 (2000) (“The elements of a constructive fraud claim are proof of circumstances ‘(1) which created the relation of trust and confidence, and (2) led up to and surrounded the consummation of the transaction in which defendant is alleged to have taken advantage of his position of trust to the hurt of plaintiff.’” (quoting Estate of Smith, 127 N.C.

2016App. 595, 599 , 534 S.E.2d 233, 236 (2000). {45} A constructive-fraud claim requires “(1) facts and circumstances creating a relation of trust and confidence; (2) which surrounded the consummation of the transaction in which the defendant is alleged to have taken advantage of the relationship; and (3) the defendant sought to benefit himself in the transaction.” Marketplace Antique Mall, Inc. v. Lewis, 163 N.C.

1997The elements of a constructive fraud claim are proof of circumstances “(1) which created the relation of trust and confidence, and (2) led up to and surrounded the consummation of the transaction in which defendant is alleged to have taken advantage of his position of trust to the hurt of plaintiff.” Terry v. Terry, 302 N.C. 77, 83 , 273 S.E.2d 674, 677 (1981), (quoting Rhodes v. Jones, 232 N.C. 547 , 61 S.E.2d 725 (1950)) (emphasis added).

1997The elements of a constructive fraud claim are proof of circumstances “(1) which created the relation of trust and confidence, and (2) led up to and surrounded the consummation of the transaction in which defendant is alleged to have taken advantage of his position of trust to the hurt of plaintiff.” Terry v. Terry, 302 N.C. 77, 83 , 273 S.E.2d 674, 677 (1981), (quoting Rhodes v. Jones, 232 N.C. 547 , 61 S.E.2d 725 (1950)) (emphasis added).

2019North Carolina law is clear that “[t]he benefit sought by the defendant [to allege the third element of a constructive fraud claim] must be more than a continued relationship with the plaintiff.” Sterner v. Penn, 159 N.C.

2019App. 626, 631 , 583 S.E.2d 670, 674 (2003) (quoting Barger, 346 N.C. at 667 , 488 S.E.2d at 224 ).

2016App at 31, 560 S.E.2d at 825 . “[O]nce a director’s fiduciary duty to creditors arises, a director is generally prohibited from taking advantage of his intimate knowledge of the corporate affairs and his position of trust for his own benefit and to the detriment of the creditors to whom he owes the duty.” Id. at 33 , 560 S.E.2d at 826 (citing Steel Co. v. Hardware Co., 175 N.C. 450 , 451–52, 95 S.E. 896, 897 (1918); Whitley, 118 N.C.

2002See Whitley v. Carolina Clinic, Inc., 118 N.C.

1997Plaintiffs rely on the statement there that “[t]he facts that defendant did not benefit from the deals on the land and that he no longer has an interest in the land are no barrier to a constructive fraud claim.” Id. at 641 , 306 S.E.2d at 183 .

1997Plaintiffs rely on the statement there that “[t]he facts that defendant did not benefit from the deals on the land and that he no longer has an interest in the land are no barrier to a constructive fraud claim.” Id. at 641 , 306 S.E.2d at 183 .

1981In Lee v. Pearce, 68 N.C. 76 (1872), the Court stated that one type of confidential relationship that would support a constructive fraud claim is where “one is the general agent of another and has entire management, so as to be in effect, as much his guardian as the regularly appointed guardian of an infant.” Id. at 87 .

1981In Lee v. Pearce, 68 N.C. 76 (1872), the Court stated that one type of confidential relationship that would support a constructive fraud claim is where “one is the general agent of another and has entire management, so as to be in effect, as much his guardian as the regularly appointed guardian of an infant.” Id. at 87 .

2026App. 711, 723 (1984) (the “substance” of the claim controls over the “form” of the claim in determining the applicable statute of limitations), rev’d on other grounds, 314 N.C. 1 (1985); Ludlum v. State, 227 N.C.

2026App. 408, 414 (2002) (concluding that the substantive rights at issue were governed by a three-year statute of limitations period as opposed to a 10-year statute of limitations period for what the plaintiff classified as a constructive fraud claim); see also Penley v. Penley, 65 N.C.

2022See Head v. Gould Killian CPA Grp., P.A., 371 N.C. 2, 9 (2018) (stating that “ ‘[c]onstructive fraud arises where a confidential or fiduciary relationship exists[.]’ ”) (cleaned up).

2021Azure Dolphin, LLC v. Barton, 371 N.C. 579, 599 (2018) (citation and quotation marks omitted).

2021The Hardin case, however, did not deal with the pleading requirements for a constructive fraud claim, see Hardin, 199 N.C.

2019Co., 238 N.C. 162, 168 , 77 S.E.2d 701, 706 (1953)). 5 Although a constructive fraud claim does not need to be pled with particularity pursuant to Rule 9(b) like other fraud claims, there is case law indicating that a Plaintiff can seek punitive damages associated with his constructive fraud claim like with other fraud claims.

2019Co., 238 N.C. 162, 168 , 77 S.E.2d 701, 706 (1953)). 5 Although a constructive fraud claim does not need to be pled with particularity pursuant to Rule 9(b) like other fraud claims, there is case law indicating that a Plaintiff can seek punitive damages associated with his constructive fraud claim like with other fraud claims.

2019“The purpose of the doctrine of election of remedies is not to prevent recourse to any remedy, but to prevent double redress for a single wrong.” Smith v. Gulf Oil Corp., 239 N.C. 360, 368 , 79 S.E.2d 880, 885 (1954); see also Triangle Park Chiropractic v. Battaglia, 139 N.C.

2019“The purpose of the doctrine of election of remedies is not to prevent recourse to any remedy, but to prevent double redress for a single wrong.” Smith v. Gulf Oil Corp., 239 N.C. 360, 368 , 79 S.E.2d 880, 885 (1954); see also Triangle Park Chiropractic v. Battaglia, 139 N.C.

2019“The purpose of the doctrine of election of remedies is not to prevent recourse to any remedy, but to prevent double redress for a single wrong.” Smith v. Gulf Oil Corp., 239 N.C. 360, 368 , 79 S.E.2d 880, 885 (1954); see also Triangle Park Chiropractic v. Battaglia, 139 N.C.

2018App. at 10 , 487 S.E.2d at 813 ) (emphasis in original); Ragsdale v. Kennedy, 286 N.C. 130, 138 , 209 S.E.2d 494, 500 (1974) (stating the essential elements of a fraud claim are: “(1) [f]alse representation or concealment of a material fact, (2) reasonably calculated to deceive, (3) made with intent to deceive (4) which does in fact deceive, (5) resulting in damage to the injured party”) (emphasis added); Wortman v. Hutaff, No. 10-CVS-4082, 2013 NCBC LEXIS 47 , at *18 (N.C.

2018App. at 10 , 487 S.E.2d at 813 ) (emphasis in original); Ragsdale v. Kennedy, 286 N.C. 130, 138 , 209 S.E.2d 494, 500 (1974) (stating the essential elements of a fraud claim are: “(1) [f]alse representation or concealment of a material fact, (2) reasonably calculated to deceive, (3) made with intent to deceive (4) which does in fact deceive, (5) resulting in damage to the injured party”) (emphasis added); Wortman v. Hutaff, No. 10-CVS-4082, 2013 NCBC LEXIS 47 , at *18 (N.C.