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      "Judges WYNN and HUNTER, Robert C. concur."
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    "parties": [
      "JOHN and SYLVIA GUYTON, Plaintiffs v. FM LENDING SERVICES, INC., Defendant"
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        "text": "ERVIN, Judge.\nJohn and Silvia Guyton (Plaintiffs) appeal from an order entered by the trial court on 13 March 2008 granting a motion to dismiss filed by FM Lending Services, Inc. (Defendant), pursuant to N.C. Gen. Stat. \u00a7 1A-1, Rule 12(b)(6). After careful consideration of the record and the applicable law, we conclude that the trial court\u2019s order is reversed in part.\nIn their complaint, Plaintiffs allege that they applied for a loan from Defendant on 22 October 2003 in order to purchase a tract of real property located at 4812 Winterlochen Road in Raleigh, North Carolina. The Federal Emergency Management Administration (FEMA), which is part of the United States Department of Homeland Security, identifies property located within the one-hundred year flood plain and designates these properties as special flood hazard areas (SFHA). On 23 October 2003, Defendant obtained a flood certification from First American Flood Data Services which stated that the property was located in a FEMA-designated SFHA. Defendant also obtained, prior to closing, a copy of a survey which contained the same information. Defendant did not, however, disclose the fact that the property was located in an SFHA to Plaintiffs at that time. In addition, Defendant failed to provide Plaintiffs with copies of either the flood certification or the survey prior to closing.\nOn 27 October 2003, Plaintiffs closed on the purchase of the property without ever learning that it was located in a FEMA-designated flood plain. Subsequently, Defendant informed Plaintiffs that the property was located in an SFHA. On 14 November 2003, Defendant provided Plaintiffs with a copy of the flood certification upon which the date that Defendant received the document \u2014 23 October 2003\u2014 had been whited out. Defendant also gave Plaintiffs an incomplete copy of the survey.\nAs a result of the fact that the property was located in an SFHA, Plaintiffs were obligated to procure flood insurance for the life of their thirty year mortgage. The initial cost of the required flood insurance was $1,600.00 per year. By the time that Plaintiffs filed their complaint, they were paying $2,200.00 per year in flood insurance costs and anticipated future cost increases.\nPlaintiffs initially filed a complaint against Defendant with the Commissioner of Banks. In response, Defendant affirmatively stated that it did not receive the flood certification report until the date of closing, 27 October 2003, and that the flood certification that it received at that time was incomplete. In addition, Defendant represented to the Commissioner that the information in its possession prior to closing indicated that the property was not located in an SFHA. Based on this evidence, the Commissioner found no evidence of any violation of law by Defendant.\nPlaintiffs then filed a complaint in Wake County Superior Court asserting claims for breach of contract and negligence against Defendant. Plaintiffs voluntarily dismissed this complaint without prejudice on 15 November 2004.\nAfter the dismissal of Plaintiffs\u2019 original civil action, Defendant\u2019s Senior Vice President of Operations, Kathleen Sue Carpenter (Carpenter), was deposed in related litigation. At that time, Carpenter revealed that Defendant altered the flood plain certification to conceal the date upon which it had been received by Defendant. Carpenter\u2019s deposition testimony represented the first occasion on which Plaintiffs learned that Defendant was aware, prior to closing, that the property was located in an SFHA without disclosing this information to Plaintiffs.\nAfter gaining this additional information, Plaintiffs filed a second complaint against Defendant in the Wake County Superior Court asserting fraud, negligent misrepresentation, and unfair and deceptive practices claims. On 16 November 2007, Defendant filed a motion to dismiss Plaintiffs\u2019 claims pursuant to N.C. Gen. Stat. \u00a7 1A-1, Rule 12(b)(6). Defendant\u2019s motion was heard on 18 February 2008. On 13 March 2008, the trial court entered an order granting Defendant\u2019s dismissal motion in which it stated that \u201cPlaintiffs have not stated a claim upon which relief could be granted and . . . judgment as a matter of law at this stage in the proceedings is appropriate.\u201d From this order, Plaintiffs appealed to this Court.\nI: Standard of Review\n\u201cThe standard of review of an order granting a 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.\u201d Burgin v. Owen, 181 N.C. App. 511, 512, 640 S.E.2d 427, 429 (2007). \u201cOn a motion to dismiss, the complaint\u2019s material factual allegations are taken as true.\u201d Owen, 181 N.C. App. at 512, 640 S.E.2d at 429. Legal conclusions, however, are not entitled to a presumption of validity. Peterkin v. Columbus County Bd. of Educ., 126 N.C. App. 826, 828, 486 S.E.2d 733, 735 (1997). \u201cDismissal is proper \u2018when one of the following three conditions is satisfied: (1) the complaint on its face reveals that no law supports the plaintiff\u2019s 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\u2019s claim.\u2019 \u201d Owen, 181 N.C. App. at 512, 640 S.E.2d at 429.\nII: Voluntary Dismissal: N.C. Gen. Stat. \u00a7 1A-1. Rule 41\nFirst, we address Defendant\u2019s contention that Plaintiffs\u2019 claims are barred by N.C. Gen. Stat. \u00a7 1A-1, Rule 41(a), given that Plaintiffs failed to re-file their second complaint within one year after voluntarily dismissing their first complaint on 15 November 2004. We conclude that Plaintiffs\u2019 claims are not barred by N.C. Gen. Stat. \u00a7 1A-1, Rule 41(a).\nN.C. Gen. Stat. \u00a7 1A-1, Rule 41(a)(1), provides, in pertinent part, as follows:\nUnless otherwise stated in the notice of dismissal or stipulation, the dismissal is without prejudice, except that a notice of dismissal operates as an adjudication upon the merits when filed by a plaintiff who has once dismissed in any court of this or any other state or of the United States, an action based on or including the same claim. If an action commenced within the time prescribed therefor, or any claim therein, is dismissed without prejudice under this subsection, a new action based on the same claim may be commenced within one year after such dismissal unless a stipulation filed under (ii) of this subsection shall specify a shorter time.\nId. (emphasis added). Defendant contends that, since the record clearly indicates that Plaintiffs voluntarily dismissed their first complaint on 15 November 2004 and did not file the current complaint until 16 October 2007, Plaintiffs\u2019 second complaint against Defendant is barred by N.C. Gen. Stat. \u00a7 1A-1, Rule 41(a).\nThis Court stated in Whitehurst v. Transportation Co., 19 N.C. App. 352, 198 S.E.2d 741 (1973), that:\nIt was the opinion of writers at the time of the adoption of Rule 41 that the provisions of that rule follow G.S. 1-25 without change, and the wording of the rule would so indicate. ... It has long been held that G.S. 1-25 did not apply when the party would not otherwise be barred from his right of action by the lapse of time prescribed by the statute of limitation relating to the cause of action. When the General Assembly adopted the provisions of G.S. 1-25 into Rule 41(a)(1), it is our opinion that it adopted also that body of case law interpreting G.S. 1-25, the effect being that it is an extension of time beyond the general statute of limitation rather than a restriction upon the general statute of limitation. In other words, a party always has the time limit prescribed by the general statute of limitation and in addition thereto they get the one year provided in Rule 41(a)(1). But Rule 41(a)(1) shall not be used to limit the time to one year if the general statute of limitation has not expired.\nWhitehurst, 19 N.C. App. at 355-56, 198 S.E.2d at 742 (citations omitted). Thus, it is important to note that, under N.C. Gen. Stat. \u00a7 1A-1, Rule 41(a), a plaintiff may \u201cdismiss an action that originally was filed within the statute of limitations and then refile the action after the statute of limitations ordinarily would have expired.\u201d Clark v. Visiting Health Prof\u2019ls, Inc., 136 N.C. App. 505, 508, 524 S.E.2d 605, 607 (2000). On the other hand, as noted in Whitehurst, N.C. Gen. Stat. \u00a7 1A-1, Rule 41(a), does not operate to shorten the applicable statute of limitations. Therefore, Defendant\u2019s argument that Plaintiffs\u2019 claims are time-barred by virtue of N.C. Gen. Stat. \u00a7 1A-1, Rule 41(a), because more than one year has passed since they voluntarily dismissed their first complaint against Defendant necessarily fails. As a result, the extent to which Plaintiffs\u2019 claims are time barred depends on the proper application of the relevant statute of limitations rather than upon the operation of N.C. Gen. Stat. \u00a7 1A-1, Rule 41(a).\nIll: Statute of Limitations\nNext, we address whether Plaintiff\u2019s claims are time-barred pursuant to the operation of the statute of limitations applicable to claims of fraud and negligent misrepresentation. After careful consideration of the record in light of the relevant legal principles, we conclude that neither Plaintiffs\u2019 fraud nor negligent misrepresentation claims are barred by the applicable statute of limitations.\nThe statute of limitations applicable to negligent misrepresentation claims is three years. See N.C. Gen. Stat. \u00a7 1-52(5); Barger v. McCoy Hillard & Parks, 346 N.C. 650, 488 S.E.2d 215 (1997). \u201c[A] claim for negligent misrepresentation \u2018does not accrue until two events occur: first, the claimant suffers harm because of the misrepresentation, and second, the claimant discovers the misrepresentation.\u2019 \u201d Barger, 346 N.C. at 666, 488 S.E.2d at 224 (quoting Jefferson-Pilot Life Ins. Co. v. Spencer, 336 N.C. 49, 57, 442 S.E.2d 316, 320 (1994)). The applicable statute of limitations for fraud is three years as well. See N.C. Gen. Stat. \u00a7 1-52(9). N.C. Gen. Stat. \u00a7 1-52(9) provides that, \u201c[f]or relief on the ground of fraud or mistake[,] the cause of action shall not be deemed to have accrued until the discovery by the aggrieved party of the facts constituting the fraud or mistake.\u201d Id. As a result, \u201cthe three-year statute of limitations for fraud or mistake does not commence to run . . . until the discovery by the aggrieved party of the facts constituting the fraud or mistake.\u201d Lee v. Keck, 68 N.C. App. 320, 326, 315 S.E.2d 323, 328 (1984), dis. review denied, 311 N.C. 401, 319 S.E.2d 271 (1984) (quotation omitted). Thus, the validity of any statute of limitations defense that Defendant might assert hinges on the date upon which Plaintiffs initially learned the facts necessary to establish a claim against Defendant relating to the purchase of the property sounding in fraud or mistake.\nThe Plaintiffs\u2019 claims for negligent misrepresentation and fraud rest upon the contention that Defendant knew that the property purchased by Plaintiff was located in an SFHA before the date of closing, but refrained from disclosing this information until after that date. As we read the complaint, the allegations of which must be taken as true given the procedural posture in which this case has come before us, Plaintiffs have alleged that they first learned that Defendant knew that the property was located in an SFHA prior to the closing and failed to disclose that information to Plaintiffs until Carpenter\u2019s 11 May 2006 deposition. As a result, the allegations of the complaint indicate that Plaintiffs\u2019 causes of action for fraud and negligent misrepresentation against Defendant did not accrue until that date. Thus, the allegations of the Complaint do not establish that Plaintiffs\u2019 claims for negligent misrepresentation and fraud are time-barred.\nIV: Failure to State a Claim\nThe essential substantive issues raised by Plaintiffs\u2019 appeal are: (1) whether a lender with knowledge that the property to be purchased by borrower is located in a flood plain owes a legal obligation arising under North Carolina law to disclose that fact to the borrower, given that the resulting purchase obligates the borrower to procure flood insurance for the life of the resulting loan; (2) assuming arguendo that such a legal obligation exists under state law, whether claims asserted for breach of that duty are pre-empted by federal law; and (3) whether Plaintiffs have pled claims for relief in a manner sufficient to survive a dismissal motion lodged pursuant to N.C. Gen. Stat. \u00a7 1A-1, Rule 12(b)(6). After careful review of the record in light of the applicable law, we conclude that the trial court erred in part by dismissing Plaintiffs\u2019 complaint.\nA: Existence of a Legal Duty\nThe first issue that we must address is the extent to which a legal duty exists under either federal or North Carolina law which might support a finding of liability under the theories alleged in the complaint. After carefully reviewing the applicable legal principles, we conclude that Defendant cannot be held liable to Plaintiff under the National Flood Insurance Act (NFIA), either directly or indirectly, but that a legal duty of the type claimed by Plaintiffs does exist under the North Carolina Mortgage Lending Act.\nCongress enacted the NFIA \u201cin order to make flood insurance available on reasonable terms and conditions to those in need of such protection.\u201d Peal v. N.C. Farm Bureau Mut. Ins. Co., 212 F. Supp. 2d 508, 512 (E.D.N.C. 2002) (citing Battle v. Seibels Bruce Ins. Co., 288 F.3d 596, 598 (4th Cir. 2002); 42 U.S.C. \u00a7 4001). 42 U.S.C. \u00a7 4001(a) states, in pertinent part, that:\nThe Congress finds that (1) from time to time flood disasters have created personal hardships and economic distress which have required unforeseen disaster relief measures and have placed an increasing burden on the Nation\u2019s resources; (2) despite the installation of preventive and protective works and the adoption of other public programs designed to reduce losses caused by flood damage, these methods have not been sufficient to protect adequately against growing exposure to future flood losses; (3) as a matter of national policy, a reasonable method of sharing the risk of flood losses is through a program of flood insurance which can complement and encourage preventive and protective measures; and (4) if such a program is initiated and carried out gradually, it can be expanded as knowledge is gained and experience is appraised, thus eventually making flood insurance coverage available on reasonable terms and conditions to persons who have need for such protection.\n42 U.S.C. \u00a7 4001(a). In addition, the enactment of the NFIA reflected Congressional concern about the increasing amount of federal flood relief expenditures. See Till v. Unifirst Fed. S. & L. Ass\u2019n, 653 F.2d 152 (1981) (stating that \u201c[t]he principal purpose in enacting [NFIA] was to reduce, by implementation of adequate land use controls and flood insurance, the massive burden on the federal fisc of the ever-increasing federal flood disaster assistance\u201d). More particularly, the NFIA attempts to reduce the risk to the public treasury created by federally-backed or regulated loans for real property that are not protected by adequate flood insurance. Till, 653 F.2d at 159 (\u201cCongress was interested ... in protecting the lending institutions whose deposits the federal regulatory agencies insured\u201d). For that reason, 42 U.S.C. \u00a7 4104a(a)(1) states, in pertinent part, that:\nEach Federal entity for lending regulation (after consultation and coordination with the Financial Institutions Examination Council) shall by regulation require regulated lending institutions, as a condition of making, increasing, extending, or renewing any loan secured by improved real estate or a mobile home that the regulated lending institution determines is located or is to be located in an area that has been identified by the Director under this title or the Flood Disaster Protection Act of 1973 as an area having special flood hazards, to notify the purchaser or lessee (or obtain satisfactory assurances that the seller or lessor has notified the purchaser or lessee) and the servicer of the loan of such special flood hazards, in writing, a reasonable period in advance of the signing of the purchase agreement, lease, or other documents involved in the transaction. The regulations shall also require that the regulated lending institution retain a record of the receipt of the notices by the purchaser or lessee and the servicer.\n42 U.S.C. \u00a7 4104a(a)(l) (emphasis added).\nPlaintiffs and Defendant agree that a party injured by a violation of the requirement that lending institutions \u201cnotify the purchaser . . . of such special flood hazards, in writing, a reasonable period in advance of the signing of the purchase agreement... or other documents involved in the transaction\u201d set out in 42 U.S.C. \u00a7 4104a(a)(1), has no express or implied private federal right of action against the lender or any other party arising from a violation of that requirement. See Mid-America Nat. Bank v. First Sav. & Loan Ass\u2019n, 737 F.2d 638 (1984) (stating that \u201c[n]either Section 4012a(b) nor Section 4104a expressly create [] a federal cause of action in favor of borrowers against mortgage lenders where the lenders do not direct borrowers to purchase flood insurance in the amount of the loan or where lenders do not notify borrowers of the HUD flood-risk area designation[,]\u201d and holding that, because there was no \u201cindication that Congress intended to authorize a federal cause of action in favor of borrowers against lenders under Sections 4012a(b) and 4104a,\u201d the court would not imply a new cause of action); Till, 653 F.2d 152; Hofbauer v. Northwestern Nat. Bank of Rochester, 700 F.2d 1197 (1983); Arvai v. First Fed. Sav. & Loan Ass\u2019n, 698 F.2d 683 (1983); Ford v. First Am. Flood Data Servs., 2006 U.S. Dist. LEXIS 74350 (2006) (stating that the \u201cFourth Circuit has clearly held that there is neither an express nor an implied private right of action by a borrower for an alleged violation of the flood zone determination and notification requirements of the Act\u201d). The question of whether a cause of action independent of 42 U.S.C. \u00a7 4104a(a)(l) that arises from a factual scenario encompassing a violation of that statutory provision may be maintained under North Carolina law is, however, an issue of first impression.\n1: Independent State Law Cause of Action\nHaving decided that there is no express or implied federal private right of action under the NFIA, we next examine whether Defendant owed a legal duty to Plaintiffs under North Carolina law. In opposing Plaintiffs\u2019 efforts to establish the existence of such a legal duty, Defendants argue that North Carolina should not adopt 42 U.S.C. \u00a7 4104a(a)(l) as the standard to be independently applied to situations of this nature under state law and that North Carolina does not recognize an independent disclosure duty arising under these facts. After carefully examining Defendant\u2019s arguments, we are constrained to disagree.\n' In arguing that North Carolina should not recognize an independent state law claim for relief based on facts that would constitute a violation of 42 U.S.C. \u00a7 4104a(a)(1), Defendant places considerable reliance on Ford, 2006 U.S. Dist. LEXIS 74350. In Ford, the District Court pointed out that \u201c[n]o North Carolina court has yet ruled upon the issue of whether a borrower has a private state law cause of action against either a lender or a third-party flood zone determination company based on a violation of the Act.\u201d Ford, 2006 U.S. Dist. LEXIS 74350. After noting that \u201cthere is neither an express nor an implied federal private right of action by a borrower for an alleged violation of the flood zone determination and notification requirements of the Act,\u201d the Ford court stated that, \u201c[i]n addition to disallowing private federal claims under the Act, some federal courts have also refused to allow common law and other state law claims by borrowers under the Act.\u201d Id. However, the Ford court acknowledged that \u201c[m]ost . . . federal courts . . . have determined that whether a state law claim based on the violation of a federal statute may be brought is a matter of state law for state courts to decide[.]\u201d Id.; see also Hofbauer, 700 F.2d at 1201 (holding that, although a federal statute may create a standard of conduct the violation of which suffices to support a claim arising under state law, whether such a claim exists is a question best left entirely to state courts); Till, 653 F.2d at 161-62 (holding that the existence of state law claims depends upon state rather than federal law and remanding the plaintiff\u2019s claims to state court). As a result of the fact that the absence of a federal private right of action under the NFIA does not inherently preclude the recognition of a state law claim that encompasses conduct prohibited by 42 U.S.C. \u00a7 4104a(a)(1), we are now called upon to decide whether a lender is liable under North Carolina law for damages resulting from a failure to disclose the fact that property is located in a flood plain.\nIn determining whether such a state law claim should be recognized in North Carolina, we find the analysis of the United States Court of Appeals for the Fifth Circuit in Till, 653 F.2d 152, to be instructive. In Till, the Fifth Circuit, like many other federal courts, held that, there was no express or implied federal private right of action pursuant to the NFIA. However, the Till court went on to hold that the district court erred in \u201cgranting a summary judgment on all claims, since its holding dismissed the Mississippi common law claims with prejudice.\u201d Till, 653 F.2d at 162. The court reasoned:\nThe [district] court held that \u201cinasmuch as all of Plaintiffs\u2019 claims herein are dependent upon the implication of a private cause of action, Plaintiffs\u2019 claims must be dismissed.\u201d Appellees, attempting to support the court\u2019s decision, reason that state common law does not provide all the elements of the asserted fraud or negligence. They assert that both causes of action require a breach of duty and that the only duty here arises from federal enactments. Therefore, they contend, there must exist a private cause of action in the federal statutes themselves before appellants can recover from the state based claims.... Whether this is true is a matter of state law.\nTill, 653 F.2d at 161 (emphasis added). Essentially, Till holds that the responsibility of determining whether a state law claim arising from facts that establish a violation of 42 U.S.C. \u00a7 4104a(a)(l) exists is a matter for the state and not the federal courts and must be decided on the basis of state law rather than federal law principles.\nThe first basis on which we might find the existence of a legal duty of the type necessary to support Plaintiffs\u2019 claim against Defendant would come from treating 42 U.S.C. \u00a7 4104a(a)(l) as establishing the required legal standard for purposes of a state law claim. Although utilizing federal statutes as the basis for recognizing a state law duty is undoubtedly appropriate in some instances, we are not convinced that doing so in this instance is appropriate for two different reasons.\nFirst, we have concerns about adopting this approach that are highlighted by the Fifth Circuit\u2019s interpretation of 42 U.S.C. \u00a7 4012a(e)(1) in Wentwood Woodside I, LP v. GMAC Commercial Mortg., 419 F.3d 310 (5th Cir. 2005). As the Fifth Circuit stated, 42 U.S.C. \u00a7 4012a(e)(1) provides, in pertinent part, that \u201c[i]f ... at any time during the term of a loan[,] . . . the servicer for the loan determines that the [SFHA property] is not covered by flood insurance ... the servicer shall notify the borrower [of this deficiency.]\u201d 42 U.S.C. \u00a7 4012a(e)(l); Wentwood Woodside, 418 F.3d at 323, f.11. The Wentwood Woodside court went on to hold that \u201cthe statute cannot be read to impose an unconditional duty on servicers to determine whether their serviced properties are adequately insured against flood damage[,]\u201d reasoning:\nSignificantly, the statute does not require a servicer to know that a serviced property has been designated as being within an SFHA. Rather, the statute creates a duty of notification only if the servicer learns that the serviced property falls within an SFHA. By using the conditional \u201cif,\u201d the statute implicitly contemplates that there will be circumstances in which a servicer does not determine that an under-insured SFHA property is in fact under-insured.\nWentwood Woodside, 419 F.3d at 322-23, f.11 (emphasis in original). Applying the logic of Wentwood Woodside to this case, we recognize that, although mortgage lenders are required to obtain and disclose flood zone determinations when making a loan, see Duong v. Allstate Ins. Co., 499 F. Supp. 2d 700, 702 (E.D. La. 2007), there may be instances in which a lender does not know that a property has been designated as located within an SFHA through no fault of its own, arguably placing itself in violation of 42 U.S.C. \u00a7 4104a(a)(1) by failing to notify the purchaser of such designation without having violated any other provision of law. We do not, for obvious reasons, believe that recognizing a state law claim which holds a lender liable for violating the requirements of 42 U.S.C. \u00a7 4104a(a)(l) despite the perfectly-understandable absence of any knowledge that the property in question was located in a flood plain would be appropriate.\nSecondly, treating 42 U.S.C. \u00a7 4104a(a)(l) as creating an independent state law duty would have the practical effect of recognizing an implied private right of action under that statute in all but name. Like other courts that have considered this approach, we believe that it would inappropriately circumvent the widely-accepted understanding that Congress did not intend to create a federal private right of action under 42 U.S.C. \u00a7 4104a(a)(l) to directly utilize that statutory provision as the basis for a state law claim. As a result, we believe that a state law claim of the type that Plaintiffs have sought to assert against Defendant, if any, must rest on a legal duty arising under one or more provisions of state law totally independent of 42 U.S.C. \u00a7 4104a(a)(l).\nIn determining whether North Carolina law recognizes a legal duty that might be applicable to Plaintiffs\u2019 claim against Defendant, we must, of necessity, keep in mind the basic thrust of Plaintiffs\u2019 claim. As described in the complaint, Defendant\u2019s conduct amounted to more than a negligent failure to notify Plaintiffs that the property in question was located in a designated flood plain in violation of 42 U.S.C. \u00a74104a(a)(l). On the contrary, Plaintiffs claim that Defendant actively and intentionally withheld the information that the property lay in a flood plain \u2014 including retention of surveys and certifications that contained relevant information and affirmative obstruction of Plaintiffs\u2019 access to important information \u2014 in order to induce Plaintiffs to purchase the property.\nAssuming that Plaintiffs are able to establish the factual validity of these allegations, we believe that they have alleged conduct on the part of Defendant sufficient to establish a violation of a legal duty established under North Carolina state law independent of 42 U.S.C. \u00a7 4104a(a)(1). More particularly, we believe the General Assembly intended to prohibit such conduct through N.C. Gen. Stat. \u00a7 53-243.11, a provision of the Mortgage Lending Act. N.C. Gen. Stat. \u00a7 53-243.11 provides, in pertinent part, as follows:\nIn addition to the activities prohibited under other provisions of this Article, it shall be unlawful for any person in the course of any mortgage loan transaction:\n(1) To misrepresent or conceal the material facts or make false promises likely to influence, persuad\u00e9, 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.\n(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 of, or purchase or sale of, any mortgage loan.\nN.C. Gen. Stat. \u00a7 53-243.11(1) and (8) (2007). Although N.C. Gen. Stat. \u00a7 53-243.11 does not directly address the specific set of factual circumstances present in this case, we conclude that this statutory provision was intended to protect buyers against the sort of activity that is alleged to have occurred here.\nIn reaching this conclusion, we note that the relevant statutory language expressly prohibits \u201cmisrepresent[ation] or conceal[ment] [of] the material facts . . . likely to influence, persuade, or induce an applicant for a mortgage loan or a mortgagor to take a mortgage loan[.]\u201d N.C. Gen. Stat. \u00a7 53-243.11(8). According to Plaintiffs\u2019 complaint, Defendant \u201cmisrepresented that the Property was not in a[n] SFHA;\u201d claimed \u201cthat it had no knowledge prior to the closing that the Property was located in a[n] SFHA;\u201d and \u201csubsequently engaged in a practice and course of business of covering up the fact that it did have knowledge that the Property was located in a[n] SFHA prior to the closing in an effort to prevent the Guytons . . . from discovering its deception.\u201d Assuming that Defendant did, in fact, engage in the conduct described in Plaintiffs\u2019 complaint, Defendant would have clearly violated N.C. Gen. Stat. \u00a7 53-243.11. As a result, there is ample basis in North Carolina law, considered without regard to 42 U.S.C. \u00a7 4104a(a)(l), for concluding that Defendant would have violated a legal duty owed to Plaintiffs if it acted as described in Plaintiffs\u2019 complaint.\n2: Federal Preemption\nHaving concluded that the NFIA does not foreclose the possibility that a party is entitled to maintain a state law cause of action stemming from a set of facts that would also constitute a violation of 42 U.S.C. \u00a7 4104a(a)(l) and that North Carolina law recognizes a duty that might be implicated by Defendant\u2019s alleged conduct, we next address the question of whether Plaintiffs\u2019 claims are nonetheless pre-empted by 42 U.S.C. \u00a7 4001, et seq., to the extent that the answer to this question is not inherent in our analysis of the NFIA as set out above. Based upon a careful review of the applicable legal materials, we conclude that Plaintiffs\u2019 claims are not preempted by federal law.\nFederal law can preempt state law on the basis of three different legal theories: express preemption, field preemption, and conflict preemption. Gade v. National Solid Wastes Management Ass\u2019n, 505 U.S. 88, 115, 120 L. Ed. 2d 73, 95 (1992). Express preemption requires \u201cexplicit pre-emptive language.\u201d Gade, 505 U.S. at 115, 120 L. Ed. 2d at 95, Souter, J., dissenting (citing Pacific Gas & Elec. Co. v. State Energy Resources Conservation and Development Comm\u2019n, 461 U.S. 190, 203, 75 L. Ed. 2d 752 (1983)). \u201cField pre-emption is wrought by a manifestation of congressional intent to occupy an entire field such that even without a federal rule on some particular matter within the field, state regulation on that matter is pre-empted, leaving it untouched by either state or federal law.\u201d Gade, 505 U.S. at 115, 120 L. Ed. 2d at 95. Conflict preemption exists when compliance with both state and federal requirements is impossible, or \u201cwhere state law stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.\u201d English v. General Elec. Co., 496 U.S. 72, 79, 110 L. Ed. 2d 65, 74 (1990). Whether federal law preempts state law under any of these theories is essentially a question of Congressional intent. N.W. Cent. Pipeline Corp. v. State Corp. Comm\u2019n of Kan., 489 U.S. 493, 509, 103 L. Ed. 2d 509, 527 (1989).\nFederal courts have concluded that the NFIA does not expressly or impliedly preempt state law claims, see Bleecker v. Standard Fire Ins. Co., 130 F. Supp. 2d 726, 734 (E.D.N.C. 2000); Till, 653 F.2d at 155 f.2, on the basis of determinations that Congress did not expressly declare that state common law claims are preempted by the NFIA or pervasively regulate the field of flood insurance. See, e.g., Bleecker, 130 F. Supp. 2d at 735 (stating that \u201c[stripping insurance claimants of protections offered by state law from the tortious conduct of insurers would leave a gapping hole in the flood insurance field which Congress did not intend\u201d); see also Peal, 212 F. Supp. 2d at 514 (stating that \u201c[t]he vast majority of courts considering [the] language [of the Act] have concluded that it does not expressly preempt state law causes of action arising from claims handling[,]\u201d and, \u201c[a]s with express preemption, most courts have declined to find field preemption in the flood insurance context [because] Congress did not pervasively regulate the field of flood insurance\u201d); see also Studio Frames, Ltd. v. Vill. Ins. Agency, Inc., 2003 U.S. Dist. LEXIS 5450 (D.N.C. 2003) (stating that \u201c[t]he majority of courts that have addressed the issue of extra-contractual claim preemption and flood insurance have decided that express preemption and field preemption are not applicable). As a result of the absence of expressly preemptive language in the NFIA and our belief that the NFIA does not regulate the flood insurance arena so completely as to exclude all state regulation, we conclude that the NFIA does not expressly preempt, or preempt through field preemption, civil actions against lenders arising in the flood insurance context based on state common law.\nFinally, we address whether state law claims are barred by the doctrine of conflict preemption. Conflict preemption comes in two different forms. \u201cThe first is found when compliance with both state and federal law is impossible, [and] the second when a state law \u2018stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress,\u2019 \u201d Gade, 505 U.S. at 115, 120 L. Ed. 2d at 95 (citing Hines v. Davidowitz, 312 U.S. 52, 67, 85 L. Ed. 581 (1941)). \u201cThe legislative history of [the] NFIA [has been interpreted to] suggest[] that Congress intend[ed] to preserve [in some instances] a plaintiff\u2019s right to obtain tort relief in state courts.\u201d Bleecker, 130 F. Supp. 2d at 734. \u201cThe legislative history behind section [42 U.S.C. \u00a7 4053] states that while claimants may file lawsuits in federal courts, claimants can \u201calso avail themselves of legal remedies in State courts.\u201d Bleecker, 130 F. Supp. 2d 726, 734 (citing H. Rep. No. 90-1585, reprinted in 1968 U.S.C.C.A.N. 2873, 3022). After a thorough examination, we conclude that neither the relevant statutory nor regulatory provisions provide a clear indication that Congress intended to preempt all state law claims against lenders arising in the flood insurance context. Bleecker, 130 F. Supp. 2d 726, 734.\nIn considering the conflict preemption issue, we believe that Plaintiffs\u2019 claims against Defendant are distinguishable from the overwhelming majority of NFIA-based preemption decisions: Plaintiffs here have asserted claims against the lender, not a WYO flood insurer, while the majority of cases in which state law claims have not been allowed to go forward involve factual scenarios in which plaintiffs assert claims against a FEMA-created WYO insurer or other flood insurer subject to thorough regulation under the NFIA. This fact alone allows the possibility of a lender\u2019s complianc\u00e9 with both state and federal law, because the applicable provisions of state law do not \u201c \u2018stand[] as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress[.]\u201d Gade, 505 U.S. at 115,120 L. Ed. 2d at 95. In fact, we recognize that Plaintiffs\u2019 claims tends to further the Congressional objective of requiring lenders to notify purchasers if properties they are proposing to buy lie in designated flood plain areas by providing lenders with an additional incentive to do so. Since Congress has not provided a federal remedy for conduct by private lenders that would constitute a violation of 42 U.S.C. \u00a7 4102(a) outside the WYO context, a decision that state law claims such as those asserted by Plaintiffs in this case are preempted would effectively immunize private lenders from any injury sustained by a purchaser no matter how egregious the lender\u2019s conduct may have been. We do not believe that Congress intended such a result. As a result, we hold that Plaintiffs\u2019 right to assert otherwise proper state law causes of action are not pre-empted by 42 U.S.C. \u00a7 4001, et seq.\nB. Sufficiency of Plaintiff\u2019s Complaint to State Recognized State Law Claims for Relief\nWe next address whether Plaintiffs\u2019 complaint states a claim for relief under some recognized legal theory sufficient to withstand Defendant\u2019s motion for dismissal pursuant to N.C. Gen. Stat. \u00a7 1A-1, Rule 12(b)(6). As a result of the fact that Defendant has not contended on appeal that the complaint fails to state a claim for fraud or unfair and deceptive practices in the event that Defendant\u2019s alleged conduct implicates a duty to disclose arising under North Carolina law independent of the relevant provisions of the NFIA and the fact that our review of Plaintiffs\u2019, complaint-indicates that they have adequately stated claims for fraud and unfair and deceptive practices, we hold that these portions of the complaint are sufficient to withstand a dismissal motion lodged pursuant to N.C. Gen. Stat. \u00a7 1A-1, Rule 12(b)(6).\nWe do not, however, reach the same conclusion with respect to Plaintiff\u2019s negligent misrepresentation claim. Even though Defendant has not argued on appeal that Plaintiffs failed to adequately allege a negligent misrepresentation claim arising exclusively under North Carolina law, we are still compelled to address this issue given the fact that the trial court\u2019s order failed to specify any particular grounds for concluding that Plaintiff\u2019s complaint was subject to dismissal pursuant to N.C. Gen. Stat. \u00a7 1A-1, Rule 12(b)(6).\n\u201c[T]he tort of negligent misrepresentation occurs when a party justifiably relies to his detriment on information prepared without reasonable care by one who owed the relying party a duty of care.\u201d Raritan River Steel Co. v. Cherry, Bekaert & Holland, 322 N.C. 200, 206, 367 S.E.2d 609, 612 (1988), rev\u2019d on other grounds, 329 N.C. 646, 407 S.E.2d 178 (1991); see also Hudson-Cole Dev. Corp. v. Beemer, 132 N.C. App. 341, 511 S.E.2d 309 (1999). As we have already noted, Defendant had a duty to disclose material information to Plaintiffs pursuant to N.C. Gen. Stat. \u00a7 53-243.11(1) and (8).\nIn their complaint, Plaintiffs make the following allegations in support of their negligent misrepresentation claim:\n37. Pursuant to N.C. Gen. Stat. \u00a7 53-243.11(1), Defendant FM Lending owed a duty to the Guytons to refrain from misrepresenting or concealing material facts likely to influence, persuade or induce the Guytons to enter into a mortgage loan agreement with it.\n38. Pursuant to N.C. Gen. Stat. \u00a7 53-243.11(8), Defendant FM Lending owed a duty to the Guytons to refrain from engaging in any transaction, practice or course of business that was not in good faith or fair dealing or that constituted a fraud upon the Guytons in connection with the making of any mortgage loan.\n39. In direct violation of these duties, Defendant FM Lending misrepresented that the Property was not in a[n] SFHA and, further, misrepresented that it had no knowledge prior to the closing that the Property was located in a[n] SFHA.\n40. In direct violation of these duties, Defendant FM Lending subsequently engaged in a practice and course of business of covering up the fact that it did have knowledge that the Property was located in a[n] SFHA prior to the closing in an effort to prevent the Guytons, the Commissioner and this Court from discovering its deception.\n41. Absent Defendant FM Lending\u2019s statutory violations, the Guytons would have: (a) delayed the closing and investigated further; (b) decided to forego purchasing the Property; (c) refrained from entering into a loan agreement with Defendant FM Lending; and[/]or (d) renegotiated the purchase price of the Property based upon the fact that it was located in a[n] SFHA.\nTaking the foregoing allegations as true, we believe that Plaintiffs have failed to sufficiently allege a claim for negligent misrepresentation. Although Plaintiffs have sufficiently alleged that the Mortgage Lending Act creates a duty of care, independent of 42 U.S.C. \u00a7 4104a(a)(l), requiring disclosure of information that property to be purchased is located in a flood plain, and that Plaintiffs justifiably relied to their detriment on Defendants\u2019 omissions, Plaintiffs have failed to sufficiently allege an unintentional failure to act in a manner inconsistent with the applicable standard of care or that the provision of information, upon which Plaintiffs had reasonably relied had not been prepared with reasonable care. By alleging that Defendant acted intentionally without ever advancing an alternative allegation that Defendant acted unintentionally or negligently, Plaintiffs have simply failed to state a claim for negligent misrepresentation (as compared to a claim for fraud). As a result, while we believe that Plaintiffs have adequately stated claims for fraud and unfair and deceptive practices, we conclude that Plaintiffs\u2019 complaint does not state a claim for negligent misrepresentation sufficient to survive a dismissal motion lodged pursuant to under N.C. Gen. Stat. \u00a7 1A-1, Rule 12(b)(6).\nConclusion\nThus, for all of these, reasons, we conclude that the trial court erred by granting Defendant\u2019s dismissal motion lodged pursuant to N.C. Gen. Stat. \u00a7 1A-1, Rule 12(b)(6), with respect to Plaintiffs\u2019 fraud and unfair and deceptive practice claims. However, we also conclude that the trial court appropriately dismissed Plaintiffs\u2019 negligent misrepresentation claim. In reaching this conclusion, we are heavily influenced by the applicable standard of review, which requires us to treat the allegations of Plaintiffs\u2019 complaint as true and to disregard the extent to which Plaintiffs will actually be able to prove the allegations that they have made. Needless to say, the extent to which the Plaintiffs are actually able to prove the conduct that they have alleged will have a significant effect on whether this case survives any motion for summary judgment pursuant to N.C. Gen. Stat. \u00a7 1A-1, Rule 56, or for a directed verdict pursuant to N.C. Gen. Stat. \u00a7 1A-1, Rule 50, that Defendant ultimately chooses to pursue. At this point, however, we believe that Plaintiffs have advanced allegations sufficient to survive a dismissal motion lodged pursuant to N.C. Gen. Stat. \u00a7 1A-1, Rule 12(b)(6) with respect to its fraud and unfair and deceptive practices claims. As a result, we reverse in part the trial court\u2019s order granting Defendant\u2019s motion to dismiss pursuant to N.C. Gen. Stat. \u00a7 1A-1, Rule 12(b)(6) and remand this case to the trial court for further proceedings not inconsistent with this opinion.\nAFFIRMED IN PART; REVERSED and REMANDED IN PART.\nJudges WYNN and HUNTER, Robert C. concur.\n. Consistently with the required standard of review, the statement of facts is based on the allegations set out in Plaintiffs\u2019 complaint. We recognize that Defendant disputes the accuracy of many of the factual statements set out in the text.\n. Given that Defendant has not argued on appeal that Plaintiffs\u2019 unfair and deceptive practices claim is barred by the applicable statute of limitations, we need not address the statute of limitations issue with respect to that claim.\n. We note that, unlike .42 U.S.C. \u00a7 4012a(e)(l), 42 U.S.C. \u00a7 4012a requires a mortgage lender to perform a flood zone determination when it makes a loan. See 42 U.S.C. \u00a7 4012a (2007); Duong, 499 F. Supp. 2d at 702 (E.D. La. 2007); Lukosus v. First Tenn. Bank Nat\u2019l Ass\u2019n, No. 02-84, 2003 U.S. Dist..LEXIS 11941, 2003 WL 21658263 (W.D. Va. 2003); Cruey v. First American Flood Data Services, Inc., 174 F Supp. 2d 525, 527 (E.D. Ky. 2001) (stating that \u201c[i]n essence, the Act provides that lending institutions subject to federal regulation may not make loans for improved real estate without insuring that such loans are secured by flood insurance in an amount at least equal to the outstanding balance of the loan\u201d).\n. Something of that nature appears to have occurred in Ford, 2006 U.S. Dist. LEXIS 74350, in which First American, \u201ca company that provides flood zone determinations for lenders,\u201d failed \u201cto correctly determine that the Property was located in an SFHA[.]\u201d Id. The lender merely received and relied upon First American\u2019s determination. Dollar v. Nationsbank of Georgia, N.A., 244 Ga. App. 116, 117, 534 S.E.2d 851, 853 (2000), provides another example, in which Albany Real Estate Services, Inc., appraised a residence for NationsBank, the lender, and determined that whether the residence was located in a flood hazard zone was \u201ctoo close to call.\u201d\n. See Ford, 2006 U.S. Dist. LEXIS 74350 (holding that \u201cany duty First American owed to Plaintiff, either from the contract between First American and USAA or from an ordinary negligence standard, would have arisen from the Act, a breach of which would violate the Act[,]\u201d and because \u201cPlaintiff\u2019s claims are based directly on alleged violations of the Act[,]\u201d they may not be maintained); Lehmann v. Arnold, 137 Ill. App. 3d 412, 484 N.E.2d 473, 481(1985) (ruling that legislative intent and federalism concerns prohibit implied state law claims for Act violations); R.B.J. Apartments, Inc. v. Gate City Sav. & Loan Ass\u2019n, 315 N.W.2d 284, 290 (1982) (refusing to recognize an implied state law cause of action for a violation of the Act, reasoning that separation of powers and federalism concerns militate against utilizing a federal statute to establish the standard of care in a negligence action when the statute allows no express or implied private right of action); Pippin v. Burkhalter, 276 S.C. 438, 279 S.E.2d 603, 604 (1981) (holding that there can be no implied right of action in favor of the purchaser under the Act because it was intended to protect a class of loans rather than purchasers); Jack v. City of Wichita, 23 Kan. App. 2d 606, 933 P.2d 787, 793 (1997) (holding that the plaintiffs\u2019 multiple negligence-based claims against a number of defendants, including the mortgage company, the land surveyor, and the City of Wichita, could not be maintained because the \u201cthe weight of authority is that the federal statutes establishing the National Flood Insurance Program do not create a duty which would support a claim for negligence\u201d); Callahan v. Country Wide Home Loans, Inc., 20 Fla. L. Weekly Fed. D 227 (2006) (holding that \u201c[o]ther than its violation of the NFIA, [the plaintiff] has not alleged any basis for a duty towards her on the part of Countrywide!,]\u201d and for that reason, the plaintiff\u2019s complaint did \u201cnot state a cause of action against Countrywide for negligence.\u201d).\n. To be absolutely clear, because we hold that the legal duty upon which Plaintiff seeks to rely does not depend on an alleged violation of 42 U.S.C. \u00a7 4104a(a)(l), we are definitely not implying a private right of action pursuant to 42 U.S.C. \u00a7 4104a(a)(l) of any type in this case, and have not, for that reason, addressed the four-factor test for determining when a court may imply a private cause of action from a federal statute. See Cort v. Ash, 422 U.S. 66, 45 L. Ed. 2d 26 (1975).\n. A more persuasive argument may be made for field pre-emption in the context of claims arising under the FEMA-created WYO (Write-Y\u00f3ur-Own) insurance program, which are, in fact, heavily regulated. See Studio Frames, 2003 U.S. Dist. LEXIS 5450 (stating that \u201cthe majority of courts who have considered the preemption issue have concluded that WYO insurers should not be subject to.potential tort liability, such as bad faith or unfair and deceptive trade practices, for their conduct in the handling of claims\u201d). Studio Frames, 2003 U.S. Dist. LEXIS 5450 (citing Gibson v. American Bankers Ins. Co., 289 F.3d 943 (6th Cir. 2002) (discussing cases); Jamal v. Travelers Lloyds of Texas Ins. Co., 129 F. Supp. 2d 1024 (S.D. Tex.2001); Messa v. Omaha Prop. & Cas. Ins. Co., 122 F. Supp. 2d 513, 522-23 (D.N.J. 2000)). Since Plaintiffs\u2019 claims do not arise from a transaction conducted under the WYO program, we need not decide whether state law claims are preempted in the WYO context.\n. In addition to the material quoted in the text, Plaintiffs\u2019 complaint also sets out the basic factual material laid out in the factual statement that appears at the beginning of the opinion in support of each of the claims for relief that we discuss in the text.",
        "type": "majority",
        "author": "ERVIN, Judge."
      }
    ],
    "attorneys": [
      "The Law Offices of Michele A. Ledo, by Michele A. Ledo, Esquire, for Plaintiffs-Appellants.",
      "Manning, Fulton & Skinner P.A., by William C. Smith, Jr., for Defendant-Appellee."
    ],
    "corrections": "",
    "head_matter": "JOHN and SYLVIA GUYTON, Plaintiffs v. FM LENDING SERVICES, INC., Defendant\nNo. COA08-614\n(Filed 18 August 2009)\n1. Statutes of Limitation and Repose\u2014 Rule 41 \u2014 timeliness\nPlaintiffs\u2019 claims were not barred by N.C. Gen.. Stat. \u00a7 1A-1, Rule 41(a) even though plaintiffs failed to refile their second complaint within one year after voluntarily dismissing their first complaint.\n2. Statutes of Limitation and Repose\u2014 fraud \u2014 negligent misrepresentation \u2014 date upon which plaintiffs initially learned the facts necessary to establish a claim\nPlaintiffs\u2019 claims were not barred by the statute of limitations for fraud and negligent misrepresentation in an action arising from the purchase of property in a flood hazard area. The validity of defendant\u2019s statute of limitations defense hinges on when plaintiffs initially learned the necessary facts.\n3. Insurance\u2014 preemption \u2014 negligent misrepresentation property not in special flood hazard areas \u2014 unfair and deceptive trade practices \u2014 fraud\nIn an action arising from the concealment of knowledge that property was in a flood zone, defendant cannot be held liable to plaintiffs under the National Flood Insurance Act but a legal duty \"of the type claimed by plaintiffs does exist under the North Carolina Mortgage Lending Act.\n4. Negligence\u2014 misrepresentation \u2014 fraud\u2014unfair and deceptive trade practices \u2014 motion to dismiss \u2014 sufficiency of evidence\nWhile plaintiffs have adequately stated claims for fraud and unfair and deceptive trade practices, plaintiffs\u2019 complaint does not state a claim for negligent misrepresentation sufficient to survive a dismissal motion under N.C.G.S. \u00a7 1A-1, Rule 12(b)(6).\nAppeal by Plaintiffs from order entered 13 March 2008 by Judge Ripley E. Rand in Wake County Superior Court. Heard in the Court of Appeals 13 January 2009.\nThe Law Offices of Michele A. Ledo, by Michele A. Ledo, Esquire, for Plaintiffs-Appellants.\nManning, Fulton & Skinner P.A., by William C. Smith, Jr., for Defendant-Appellee."
  },
  "file_name": "0030-01",
  "first_page_order": 56,
  "last_page_order": 75
}
