1IN THE UNITED STATES DISTRICT COURTFOR THE WESTERN DISTRICT OF NORTH CAROLINAAsheville DivisionROBERT W. NAGLE, ))Plaintiff, ))v. ) Civil Action No.))BANK OF AMERICA, N.A., ))Defendant. )
COMPLAINT
Plaintiff, by counsel, state as follows for their Complaint against Defendant Bank of America, N.A. (the "Bank").NATURE OF THE CASE1.
This case involves a real estate development marketed and sold to the Plaintiff and others by LR Buffalo Creek, LLC ("LR Buffalo Creek"), its parent company Land Resource,LLC ("Land Resource") (together, the "Developers"), and the Bank, through an elaborate schemedesigned to artificially inflate the value of lots in a subdivision located in Lake Lure, NorthCarolina known as Grey Rock ("Grey Rock").2.
The Developers accomplished this scheme, with the assistance of the Bank,through various negligent and/or intentional misrepresentations made directly and throughinstrumentalities of interstate commerce, including direct mailings, telephone calls, electronicmail, facsimile, and interstate commercial carriers.3.
The Developers and the Bank, through their agents, represented to Plaintiff thatGrey Rock would be a luxury resort with numerous amenities, as well as roads and utilities, toserve the lots in the subdivision.
24.
At the same time the Developers and the Bank were making representationsconcerning the numerous amenities that would be built in the community, as well as the timingof the construction of those amenities, the Developers knew that developing the community wasimpossible because, among other reasons, they were negligently or intentionally permitting orcausing the distribution of funds needed to construct the required infrastructure to themselvesand to other entities, without consideration, thus rendering the Developers insolvent and unableto meet their financial obligations.5.
The Developers ultimately collected approximately ninety million dollars($90,000,000) in revenues from the sale of approximately 435 lots in Grey Rock.6.
In 2008, LR Buffalo Creek, affiliated single purpose entities pursuing similardevelopments, and their parent company Land Resource, voluntarily filed for Chapter 11bankruptcy protection in the United States Bankruptcy Court for the Middle District of Florida.The various bankruptcy actions have been consolidated and converted into a Chapter 7liquidation proceeding.7.
LR Buffalo Creek's business model, and that of its affiliated entities, was to selllots first and build infrastructure later, or not at all. This led to what Land Resource founder andPresident J. Robert Ward has euphemistically called "trailing development obligations." Despitegenerating approximately $90,000,000 in revenue from the sale of lots and despite its "trailingdevelopment obligations," when LR Buffalo Creek filed for bankruptcy protection, it had only$905.00 in cash to its name.8.
The Bank was enriched by this scheme to sell lots at inflated prices to the Plaintiff because, among other reasons, it received loan origination fees that were a percentage of the totalamount of each loan that the Bank made to individuals who purchased lots in Grey Rock; it
3received a stream of interest payments on the loans; its employees were compensated based onloan volume; and its executives were compensated in part based on stock performance, whichwas tied to the Bank's financial statements which, in turn, were enhanced by these loans, at leastin the short term.9.
The Bank also aided and abetted the commission of the various acts describedherein as it acted in concert with the Developers or pursuant to a common design, or the Bank knew that the Developers' conduct constituted a breach of duty to the Plaintiff and they gavesubstantial assistance or encouragement to the Developers.10.
During the time period from 2005-2009, Bank of America promoted "The Bank of America Net 5 Lot Loan" program and stated in its advertising materials as follows: "Found alot & plan to build? We'll help you make it happen!"11.
The Bank of America Net 5 Lot Loan program offered lot purchasers interest onlypayments for the first five years of the loan, with principal and interest payments thereafter at anadjustable mortgage rate. The Bank of America Net 5 Lot Loan program offered a loan-to-valueratio up to 95% for purchases and 90% for refinances.12.
The Bank utilized the Bank of America Net 5 Lot Loan program to induceindividuals to enter into loan agreements and purchase lots in Grey Rock as part of its aggressivestrategy to rapidly increase the volume of its lending business.13.
The Bank, through employees Mindy Johnson, Trey Ford, Stacee Peterson,Andrea Dickens, Rhonda Brooks, and Marie Sladky made numerous false statements within thescope of their employment designed to induce consumers into entering into loan agreements withthe Bank and purchasing lots in Grey Rock and other similar developments.
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