Summary:
KGC Homeowners, Inc. (“KGC”) brought suit against William Douglas Management, Inc. (“WDM”) alleging breach of contract, negligence and breach of fiduciary duty. While conceding that the complaint sufficiently alleged a breach of contract, WDM moved to dismiss the negligence and breach of fiduciary duty claim, pursuant to Rule 12(b)(6) and Iqbal/Twombly.
The elements of a negligence claim are:
(1) The Defendant owed a duty to plaintiff;
(2) The Defendant breached the duty by failing to conform to the required standard of conduct,
(3) The breach of duty resulted in injury to the plaintiff; and
(4) An actual injury to the interests of the plaintiff occurred.
See Hutchens v. Hankins, 63 N.C. App. 1, 13, 303 S.E.2d 584, 592 (1983). The bankruptcy court held these were plead with sufficient detail.
A claim for a breach of fiduciary duty has three elements:
(1) A showing of a fiduciary relationship;
(2) Thereby establishing a fiduciary duty; and
(3) A breach of that duty.
See Dalton v. Camp, 353 N.C. 647, 654, 548 S.E.2d 704, 709 (2001). Because a contract alone does not give rise to a fiduciary duty, KGC was required, but failed, to show a “special confidence”, “domination and influence” or “superior knowledge, trust and inexperience” necessary to establish a fiduciary relationship.
WDM argued that the economic loss doctrine, “which prohibits the recovery of damages in tort where a contract exists to allocate risk and assign damages” See N.C. State Ports Auth. v. Lloyd A. Fry Roofing Co., 294 N.C. 73 (1978), precluded a breach of contract claim being raised at the same time as negligence and/or breach of fiduciary duty claim claim. The court held that even though such claims might ultimately be incompatible, in ruling on a 12(b)(6) Motion to Dismiss it was only necessary that these “be assessed for factual sufficiency and plausibility under federal procedural standards rather than the North Carolina substantive law.”
For a copy of the opinion, please see:
KGC Homeowners, Inc.- Pleading Requirements for Negligence and Breach of Fiduciary Duty, Economic Loss Doctrine
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