By Justine Asman '26
When state supreme courts reverse decisions, it is usually based on their interpretation of the law differing from that of a lower court. But what happens when judicial certiorari allows them to overrule cases based on the period in which they were filed? After the shocking overturning of the appellate decision in Taylor v. Bank of America by the North Carolina Supreme Court in March 2024, a clear question emerged: Was this the right use of judicial certiorari power? The outcome of this ruling sets a precedent that banks can continue to avoid liability that other companies would be subjected to. (1) The overturning itself, though, was based on the arguments and language over statute of limitations issues.
In 2008, the financial crisis affected not only the individual's ability to get jobs but also their ability to keep their homes. To reduce costs, the Department of Treasury offered homeowners mortgage reductions through the Home Affordable Modification Program (HAMP). (2) This opportunity was a lifeline for many families in the United States. However, it had inadvertent consequences; bank clients such as Chester Taylor III fell victim to financial fraud during the worst time of their lives. As filed in the master complaint, Taylor was informed by Bank of America about HAMP but was told he was not behind enough on his mortgage to qualify. (3) To ensure he met the qualifications, Taylor was advised by his bank to forgo paying his mortgage payment and then submit the forms for HAMP. (4) The fraudulent factor was the lack of communication with Taylor: he would not qualify for HAMP no matter what he did, and Bank of America knew this from the start. So, after months of purposely missing mortgage payments based on information from his bank, he failed to qualify for HAMP and ended up with a house foreclosure. (5) This was the final straw that triggered a messy back-and-forth conflict.
The complaint submitted by the plaintiff was filed in 2018 and amended the following year. This was 10 years after the HAMP program was initially introduced and 9 years after most plaintiffs had lost their homes. This time frame formed the basis for the North Carolina Supreme Court's overturning verdict and became the central argument for the defense, according to their answer. (6) The defense focused on the period when the case was brought up, rather than the facts or evidence of fraud committed by the defendant. They argued that the North Carolina statute of limitations for fraud only begins when the plaintiff should have discovered their injury, giving a timeframe of only 3 years after the plaintiff lost their home to file their case as argued by the defense attorney Bradley Kutrow. (7) The shock in March 2024 came when the North Carolina judges found that the statute of limitations had expired and the filing was too late, arguing that the plaintiff should have foreseen the scheme made by the banks earlier and filed up to 3 years after they lost their home. (8)
What didn’t they consider? The North Carolina Supreme Court bluntly ignored one crucial detail: the complaint was made for fraud against Bank of America, not negligence. As stated in NC code under 1-52 paragraph 9, “For 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.” (9) In other words, the time to take legal action for fraud or mistake starts only when the wronged party discovers the facts that prove the fraud or mistake. This is what the North Carolina Supreme Court did not consider and why the reversal argument lacks soundness. As shown in the plaintiff’s complaint, Bank of America attempted to cover up its scheme. With evidence of concealment showing that Bank of America acknowledged its fraudulent scheme, it is puzzling how the decision was made in favor of the banks. This is why the plaintiff was unaware of the case he could have against the defendants and why it took him longer to reasonably understand that he was part of a scheme by the banks.
The North Carolina Supreme Court ultimately concluded that in entering into a financial program, bank fraud should always be assumed. But is this reasonable? (10) Doesn't this excuse banks from future cases by assuming they may deceive homeowners and infringe on their rights to property protection? (11) Doesn't this disregard a bank's duty of care to their clients? In Hoye v. Meek, the Tenth Circuit clarified:
“There is no separate standard for an ordinarily prudent non-resident director or an ordinarily prudent semi-retired director. The standard does not vary depending upon one’s residence or retirement status. The obligation to the corporation, and ultimately to the creditors and depositors, is the same. After all, we are applying a standard of care which the legislature intended to govern those who are charged with responsibility for other people’s money.” (12)
The obligation for most corporations to act in good faith is universal, holding banks to the same liability if they fail in this regard. However, rulings such as Taylor v. Bank of America suggest that individuals should assume they could still fall victim to schemes by companies they trust with their money and homes. (13)
With this court outcome, there will likely be another appeal or attempt to get this case tried in front of a jury. This is another ruling favoring the banks and siding with defendants, debating the interpretable language of the statute of limitations instead of addressing the fraudulent acts. This oversight by the Supreme Court reinforces the idea that banks are legally untouchable, diverging from civil action norms and highlighting how money can influence legal outcomes.
The fight continues for plaintiff attorneys at law firms like Aylstock, Witkin, Kreis, and Overholtz, who led the charge with Caitlyn Miller arguing before the SCONC. In the meantime, this ruling opens a gateway for banks to continue fraudulent schemes against homeowners. It constitutes an announcement to all companies that fraud does not apply to them as long as they hide it until their SOL clock runs out. The ruling means the families that lost their homes to bank fraud must assume it is their fault for not fully investigating a crime they weren't even aware of, leaving any protection for individual rights and the practice of good faith in modern corporate America in shambles.
Endnotes
Sarah D. Morris, “Banks and Banking--Duty to Third Parties--Holder in Due Course [Maley v. East Side Bank, 361 F.2d 393 (7th Cir. 1966)],” Case Western Reserve Law Review, 1967. https://scholarlycommons.law.case.edu/cgi/viewcontent.cgi?article=4478&context=caselrev.
“Home Affordable Modification Program (HAMP),” U.S. Department of the Treasury, January 30, 2017. https://home.treasury.gov/data/troubled-assets-relief-program/housing/mha/hamp.
Taylor v. Bank of America, N.A., 385 N.C. 783, 898 S.E.2d 740, 2024 N.C. LEXIS 146 (Supreme Court of North Carolina, March 22, 2024, Filed). https://advance-lexis-com.lp.hscl.ufl.edu/api/document?collection=cases&id=urn:contentItem:6BM5-W963-RSRR-1412-00000-00&context=1519360. https://law.justia.com/cases/north-carolina/supreme-court/2024/102a20-3.html.
Ibid.
Ibid.
Ibid.
Ibid.
Ibid.
General Assembly, North Carolina, “Article 5: Limitations, Other than Real Property,” Chapter 1 - Article 5. Accessed August 5, 2024. https://www.ncleg.net/EnactedLegislation/Statutes/HTML/ByArticle/Chapter_1/Article_5.html#:~:text=(9)%20For%20relief%20on%20the,constituting%20the%20fraud%20or%20mistake.
Julie Anderson Hill, “The Duty of Care of Bank Directors and Officers,” Alabama Law Review, 2017. https://www.law.ua.edu/lawreview/files/2011/07/The-duty-of-Care-of-Bank-Directors-and-Officers.pdf.
Ibid.
Hoye v. Meek, 795 F.2d 893, 1986 U.S. App. Lexis 26553, (United States Court of Appeals for the Tenth CircuitJune 27, 1986, Filed) 1-52, paragraph 9. https://advance-lexis-com.lp.hscl.ufl.edu/api/document?collection=cases&id=urn:contentItem:3S4X-3Y20-0039-P07J-00000-00&context=1519360.
Emily Turner, “Rule 52(a)(2) and the Exception-to-the-Exception: Why Certain Orders Shouldn’t Include Findings of Fact, Even When Requested,” On the Civil Side | UNC Chapel Hill School of Government, December 2, 2022. https://civil.sog.unc.edu/rule-52a2-and-the-exception-to-the-exception-why-certain-orders-shouldnt-include-findings-of-fact-even-when-requested/.
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