IN THE SUPREME COURT OF NORTH CAROLINA

2021-NCSC-147

No. 216A20

Filed 17 December 2021

JAMES CUMMINGS and wife, CONNIE CUMMINGS

v.

ROBERT PATTON CARROLL; DHR SALES CORP. d/b/a RE/MAX COMMUNITY 

BROKERS; DAVID H. ROOS; MARGARET N. SINGER; BERKELEY 

INVESTORS, LLC; KIM BERKELEY T. DURHAM; GEORGE C. BELL; 

THORNLEY HOLDINGS, LLC; BROOKE ELIZABETH RUDD-GAGLIE f/k/a 

BROOK ELIZABETH RUDD; MARGARET RUDD & ASSOCIATES, INC.; and 

JAMES C. GOODMAN

Appeal pursuant to N.C.G.S. § 7A-30(2) from the decision of a divided panel of 

the Court of Appeals, 270 N.C. App. 204 (2020), affirming, in part, and reversing and 

remanding, in part, an order entered on 31 July 2018 by Judge Alma L. Hinton in 

Superior Court, Brunswick County, granting summary judgment in favor of

defendants Robert Patton Carroll; DHR Sales Corp. d/b/a Re/Max Community 

Brokers; Berkeley Investors, LLC; George C. Bell; Brooke Elizabeth Rudd-Gaglie 

f/k/a Brooke Elizabeth Rudd; Margaret Rudd & Associates, Inc.; and James C. 

Goodman. On 15 December 2020, the Supreme Court allowed defendants Berkeley

Investors’ and Mr. Bell’s petition for discretionary review as to additional issues. 

Heard in the Supreme Court on 30 August 2021.

Chleborowicz Law Firm, PLLC, by Christopher A. Chleborowicz and Elijah 

A.T. Huston, for plaintiff-appellees.
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Wallace, Morris, Barwick, Landis & Stroud, P.A., by Stuart Stroud and 

Kimberly Connor Benton for defendants-appellants Brooke Elizabeth RuddGaglie f/k/a Brooke Elizabeth Rudd; Margaret Rudd & Associates, Inc.; and 

James C. Goodman.

Alexander C. Dale and Ryal W. Tayloe for defendants-appellants George C. Bell 

and Berkeley Investors, LLC.

Crossley McIntosh Collier Hanley & Edes, PLLC, by Clay Allen Collier, for 

defendants-appellants Robert Patton Carroll and DHR Sales Corp. d/b/a 

Re/Max Community Brokers.

ERVIN, Justice.

¶ 1 This case stems from a dispute surrounding the purchase of an oceanfront 

beach house located on Oak Island by plaintiffs James Cummings and his wife, 

Connie Cummings. Several months after closing, plaintiffs discovered the existence 

of significant structural damage to the house arising from past water intrusion,

prompting them to assert claims against defendants for negligence, negligent 

misrepresentation, fraud, unfair and deceptive trade practices, breach of contract,

breach of the implied covenant of good faith and fair dealing, and breach of fiduciary 

duty. After the conclusion of discovery, the trial court granted defendants’ motions 

for summary judgment. On appeal, we have been asked to determine if the trial court 

correctly granted summary judgment with respect to the claims of negligence and 

fraud against Re/Max and Mr. Carroll, negligent misrepresentation and fraud 

against Berkeley Investors and Mr. Bell, and breach of fiduciary duty against Rudd 

& Associates, Ms. Rudd-Gaglie, and Mr. Goodman. After careful consideration of the 
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record in light of the applicable law, we affirm the decision of the Court of Appeals, 

in part; reverse the decision of the Court of Appeals, in part; and remand this case to 

Superior Court, Brunswick County, for a trial on the merits with respect to these 

claims.

I. Factual Background

A. Substantive Facts

¶ 2 On 15 August 2014, plaintiffs purchased an oceanfront beach house located on

Oak Island from Berkeley Investors. Plaintiffs were represented in connection with 

the transaction by Rudd & Associates, acting through Ms. Rudd-Gaglie and Mr.

Goodman. On the other hand, Berkeley Investors was represented by Re/Max, with 

Mr. Carroll serving as the listing agent. At all times relevant to this case, Mr. Bell 

and defendant Thornley Holdings, LLC, which is an entity owned by defendant Kim 

Durham, each owned a fifty-percent interest in Berkeley Investors.

¶ 3 Berkeley Investors had purchased the house, which had been built in 2003, for

use as a short-term rental property.

1 Berkeley Investors retained Oak Island 

Accommodations, Inc., for the purpose of renting, cleaning, and otherwise 

maintaining the property. According to maintenance records maintained by Oak 

Island Accommodations, the house had experienced numerous maintenance-related

 

1 The house is elevated above the ground level by pilings, with the second floor, which 

is used as a guest area, containing a living room and two bedrooms, while the third floor, 

which constitutes the main level, contains a central living area, a kitchen and dining area, 

and a master bedroom.
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problems from 2005 through 2014, including water damage to the ceiling, a number 

of internal water leaks, and mold growth.

¶ 4 On 2 January 2013, Berkeley Investors hired Mr. Carroll for the purpose of 

listing the house for sale. Subsequently, on 20 January 2013, Berkeley Investors

executed a State of North Carolina Residential Property and Owners’ Association 

Disclosure Statement, which residential property owners are required to provide to 

prospective buyers in accordance with N.C.G.S. § 47E-4. Mr. Bell and Ms. Durham,

who completed the form on behalf of Berkeley Investors, answered the following 

questions in the negative:

Regarding the [house] . . . to your knowledge is there any

problem (malfunction or defect) with any of the following:

. . . .

1. FOUNDATION, SLAB, FIREPLACES/CHIMNEYS, 

FLOORS, WINDOWS (INCLUDING STORM WINDOWS

AND SCREENS), DOORS, CEILINGS, INTERIOR AND

EXTERIOR WALLS, ATTACHED GARAGE, PATIO,

DECK OR OTHER STRUCTURAL COMPONENTS

including any modifications to them?

2. ROOF (leakage or other problem)?

3. WATER SEEPAGE, LEAKAGE, DAMPNESS OR

STANDING WATER in the basement, crawl space or slab?

. . . .

10. PRESENT INFESTATION, OR DAMAGE FROM 

PAST INFESTATION OF WOOD DESTROYING 

INSECTS OR ORGANISMS which has not been repaired?
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According to the disclosure statement, if “something happens to the property to make 

your [d]isclosure [s]tatement incorrect or inaccurate (for example, the roof begins to 

leak), [the sellers] must promptly give the purchaser a corrected [d]isclosure 

[s]tatement or correct the problem.”

¶ 5 Mr. Bell and Ms. Durham knew of and had discussed problems relating to 

water intrusion into the house as early as January 2011, with Mr. Carroll having 

been included in these discussions as early as 14 October 2013, following his 

engagement as the listing agent. For example, in a 14 October 2013 e-mail to Ms. 

Durham and Mr. Carroll, Mr. Bell stated that the owners needed to “trace the source 

of the water leakage evident on the ceiling” of the guest room and “[f]ix the 

separated/rotted wood in the guest room level from the water leakage.” In addition, 

Mr. Bell noted that he had “[f]ound a small plumbing leak in the kitchen” that he had

“fixed with tape.”

¶ 6 On 20 January 2014, Mr. Bell sent an e-mail to Ms. Durham that contained a 

list of repairs that needed to be made to the house and in which he noted that:

[t]here has been a lot of water-intrusion that has come into 

[the guest-level] ceiling from wind driven rain from above 

and has stained it badly about 15 feet into the room ceiling. 

It’s right in the center of the room and seems to originate 

on the upper level and flow down through the interior 

column between the doors.

Mr. Bell recommended that the owners “[f]ind and repair the source of this leak that 

is causing the damage. We’ll need to get a few boards replaced on the columns as 
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well; they are buckled from the water-intrusion.” In addition, Mr. Bell suggested that 

the owners paint the wooden trim around the doors leading to the lower deck because 

it was “in real danger of beginning to rot.” Although records obtained from Oak Island 

Accommodations dated 13 February 2014 indicate that it was seeking estimates

relating to the cost of the work needed to repair these problems, an entry in its records 

dated 25 March 2014 notes that “[o]wner is having this work completed by another 

vendor.”

¶ 7 In March 2014, Mr. Carroll enlisted the services of Randy Cribb, a painter who 

had performed painting work on the house during the preceding year. In addition to 

painting the living room walls and ceiling, an exterior wall, and the upper and lower 

decks, Mr. Cribb agreed to repair “cracks” and “cracked caulk” in the ceiling. At some 

time prior to 24 March 2014, Mr. Cribb sent a text message to Mr. Carroll in which 

he stated that he was almost finished with the work that he had been engaged to 

perform, that he “may have found that leak,” and that he “hope[d] that was it.” On 

the other hand, Mr. Cribb’s deposition testimony indicated that he had not looked 

behind the walls for the purpose of determining whether any water intrusion had 

occurred.

¶ 8 In April 2014, plaintiffs contacted Ms. Rudd-Gaglie, with whom they had 

worked in the past, for the purpose of assisting them in exploring the option of

purchasing the house. As a result, Ms. Rudd-Gaglie contacted Mr. Carroll and 
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arranged for an initial site visit, which she attended with plaintiffs. On 26 June 2014, 

plaintiffs employed Rudd & Associates to represent them in connection with the 

purchase of the house by executing an Exclusive Buyer Agency Agreement which

provided, among other things, that (1) Rudd & Associates had a duty to “disclos[e] to 

[plaintiffs] all material facts related to the property or concerning the transaction of 

which [Rudd & Associates] has actual knowledge” and would “exercise ordinary care, 

comply with all applicable laws and regulations, and treat all prospective sellers 

honestly” in the process; (2) plaintiffs were “advised to seek other professional advice

in matters of . . . wood-destroying insect infestation, structural soundness, 

engineering, and other matters pertaining to any proposed transaction”; and (3),

although Rudd & Associates “may provide [plaintiffs] the names of providers who 

claim to perform such services, [plaintiffs] understand[ ] that [it] cannot guarantee 

the quality of service or level of expertise of any such provider.” The buyer agency 

agreement also specified that plaintiffs “agree[d] to indemnify and hold [Rudd & 

Associates] harmless” for any liability arising “either as a result of [plaintiffs’] 

selection and use of any such provider or [plaintiffs’] election not to have one or more 

of such services performed.”

¶ 9 On 12 July 2014, plaintiffs made an offer to purchase the house for $1.25 

million, which was accepted on behalf of Berkeley Investors by Mr. Bell on 12 July 

2014 and by Ms. Durham on 13 July 2014. The Offer to Purchase and Contract
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between plaintiffs and Berkeley Investors included a 30-day due diligence period, 

during which plaintiffs or their agents were entitled to “conduct all desired tests, 

surveys, appraisals, investigations, examinations and inspections of the Property as 

[plaintiffs’] deem[ ] appropriate” and specifically provided for the performance of 

inspections “to determine . . . the presence of unusual drainage conditions or evidence 

of excessive moisture adversely affecting any improvements on the Property” or 

“evidence of wood-destroying insects or damage therefrom.” After noting that 

plaintiffs acknowledged having received and reviewed the disclosure statement, the

purchase contract provided that “THE PROPERTY IS BEING SOLD IN ITS 

CURRENT CONDITION” and that Berkeley Investors had not extended any 

warranty to plaintiffs in connection with the sale.

¶ 10 Ms. Rudd-Gaglie recommended that plaintiffs employ Jeff Williams, a licensed 

home inspector, to inspect the house. On 19 July 2014, Mr. Williams conducted his 

inspection, with Mr. Cummings, Mr. Carroll, Ms. Rudd-Gaglie, and Mr. Goodman, 

who was the broker-in-charge at Rudd & Associates, in attendance. Mr. Cummings 

testified during his deposition that, after the conclusion of the inspection, he asked 

Mr. Carroll if the house was “a good, watertight, sound house?” and that Mr. Carroll

had responded by stating that, “if [he] had the money, [he would] buy it.”

¶ 11 In the detailed report that he prepared for Ms. Rudd-Gaglie following the

completion of the inspection, Mr. Williams outlined the scope of the work that he had 
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performed by indicating that he would, among other things, (1) “[r]eport signs of 

abnormal or harmful water penetration into the building or signs of abnormal or 

harmful condensation on building components” and (2) “[p]robe structural 

components where deterioration is suspected.” On the other hand, the report stated

that Mr. Williams would not “[e]nter any area or perform any procedure that may 

damage the property or its components” and that he would not be required to “[m]ove 

personal items, panels, furniture, equipment, plant life, soil, snow, ice or debris that 

obstructs access or visibility” or “inspect[ ] behind furniture, area rugs or areas 

obstructed from view.” At the end of each section, the report stated that, “[w]hile the 

inspector makes every effort to find all areas of concern, some areas can go unnoticed” 

and that “[i]t is recommended that qualified contractors be used in your further 

inspection or repair issues as it relates to the comments in this inspection report.” In 

addition, Section 1 of the report, which addressed issues relating to “Roofing,”

specifically noted that “[o]ur inspection makes an attempt to find a leak but 

sometimes cannot.”

¶ 12 In the more structure-specific portions of his report, Mr. Williams noted the 

existence of numerous problems with the house that needed to be repaired, including:

(1) the presence of minor damage to the roof; (2) the need for portions of the exterior 

walls “to be sealed to keep water and insect[s] from entering the home”; (3) the 

presence of certain doors that would not close or seal properly; (4) the difficulty of 
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opening certain sliding doors and windows and the presence of rust stains on some of 

those fixtures; and (5) the presence of loose drywall tape near the guest-level 

entryway, a condition that Mr. Williams attributed to a “lack of air movement” and

that led him to recommended the installation of a dehumidifier “to remove moisture.”

On the other hand, nothing in Mr. Williams’ report suggested that the house had 

experienced significant water intrusion. In his deposition, Mr. Williams testified that 

he had not seen any evidence of water intrusion; that, if he had, he “most definitely” 

would have conducted a moisture test by using an awl to probe the wall and identify 

spots in which the drywall had been softened by moisture; that no one had made him 

aware that the house had a history of water intrusion; and that, had he been informed 

that water intrusion had occurred at the house, he would have either conducted a 

moisture test or declined to perform the inspection.

¶ 13 On 21 July 2014, Ms. Rudd-Gaglie e-mailed the inspection report to plaintiffs,

stating that Mr. Williams had told her that, while the issues that needed to be 

addressed included “mostly small items,” “the bigger items were the doors and 

windows.” Ms. Rudd-Gaglie advised plaintiffs to “look over the report” and then call 

her to “discuss how [plaintiffs] would like to proceed with repairs.” In light of the 

report, plaintiffs and Berkeley Investors amended the purchase contract to provide 

that Berkeley Investors would pay $4,500 relating to plaintiffs’ “expenses associated 

with the purchase of the Property,” with this amount having been intended, according 
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to Mr. Cummings, to cover the costs of making the repairs that had been identified 

in Mr. Williams’ report. The sale of the house closed on 15 August 2014.

¶ 14 In November 2014, plaintiffs and various members of their family came to the 

house for the purpose of celebrating Thanksgiving. At that time, which occurred

shortly after a major thunderstorm, plaintiffs observed evidence of significant water 

intrusion extending approximately fifteen feet into the guest floor ceiling. After 

cutting away a section of the sheetrock in the wall, Mr. Cummings and his son-in-law

discovered the presence of black mold and a large termite nest. Mr. Cummings 

contacted Ms. Rudd-Gaglie to advise her of this discovery, and she recommended that 

Mr. Cummings contact Craig Moore, a licensed general contractor, for the purpose of 

getting him to inspect the house.

¶ 15 On the following morning, Mr. Moore conducted an initial inspection of the 

house. In his deposition testimony, Mr. Moore stated that, at the time of his initial 

visit to the house, he had observed that the ocean-side wall on the guest level

displayed signs of significant water and termite damage and “massive rot,” which he 

described as a “structural issue.” Mr. Moore stated that such problems would “take[ 

] quite a while” to develop and that such extensive termite damage “doesn’t happen 

in a couple of days.” After removing the interior sheetrock walls, Mr. Moore observed

the presence of more extensive water damage and rot and discovered that someone 
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had shoved newspaper into holes in the wall before caulking over the newspaperfilled holes.

¶ 16 In the aftermath of at least one additional visit to the house, Mr. Moore sent 

plaintiffs a letter dated 5 December 2014 in which he noted that the house had “many 

active and substantial leaks, which need to be repaired as quickly as possible”; 

warned that “[t]he structural integrity of the house is or will be compromised as the 

combination of active leaks and active termite infestation worsen[s]”; and opined that 

there appeared to have been some “recent aesthetic repairs made to many of the 

questionable areas.” According to Mr. Moore, the extensive damage to the house that 

he had discovered showed that, while the house had not been “properly maintained,”

“work had been done to make the house look better.” In addition, Mr. Moore 

concluded that the “previous damage to the house, wherever it was, was carefully 

painted and hidden so that the only way to discover that there was an ongoing waterintrusion problem would have been to do extensive intrusion testing into the walls” 

and opined that anyone performing minor paint and repair work at the house “could 

[not] have done that work without knowing they were covering up a major problem.”

¶ 17 According to Mr. Moore, the conditions that he observed in the house would 

not have given someone performing a visual inspection any reason to believe that 

conducting intrusive testing for the presence of moisture would have been 

appropriate. On the other hand, Mr. Moore also testified that, had he inspected the 
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house, he would have identified the moisture intrusion problems given that he had 

been trained to recognize when cosmetic repairs had been performed. For this reason, 

Mr. Moore had advised plaintiffs that they should always have a general contractor, 

rather than a home inspector, perform any needed home inspections. Plaintiffs paid

Mr. Moore in excess of $300,000 to repair the damage that the house had sustained.

B. Procedural History

¶ 18 On 2 September 2015, plaintiffs filed a complaint asserting certain claims 

arising from their purchase of the house. After obtaining leave of court, plaintiffs 

filed an amended complaint on 12 September 2016 in which they asserted claims for

(1) negligence against Re/Max, Mr. Carroll, Rudd & Associates, Ms. Rudd-Gaglie, and

Mr. Goodman; (2) negligent misrepresentation against all defendants; (3) breach of 

fiduciary duty against Rudd & Associates, Ms. Rudd-Gaglie, and Mr. Goodman; (4) 

unfair and deceptive trade practices, pursuant to N.C.G.S. § 75-1.1 et seq., against

Berkeley Investors, Mr. Bell, Re/Max, and Mr. Carroll; (5) breach of contract against

Berkeley Investors and Mr. Bell; (6) breach of the implied covenant of good faith and 

fair dealing against Berkeley Investors and Mr. Bell; (7) fraud and fraud in the 

inducement against Berkeley Investors, Mr. Bell, Re/Max, and Mr. Carroll; (8) fraud 

by concealment against Berkeley Investors, Mr. Bell, Re/Max, and Mr. Carroll; and 
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(9) personal liability against Mr. Bell.2 In essence, plaintiffs alleged that defendants 

had induced them to purchase the house in spite of its damaged condition, with the 

damage having resulted from, among other things, undisclosed water-intrusion 

problems and termite infestation, and sought to recover compensatory damages 

related to the costs that they had incurred in repairing the house, treble damages

pursuant to N.C.G.S. §75-1.1 et seq., and punitive damages.

¶ 19 On 18 October 2016, 14 November 2016, and 30 November 2016, defendants 

filed responsive pleadings in which they denied the material allegations of the 

amended complaint, asserted various defenses, and sought the dismissal of the 

amended complaint. On 24 and 31 May 2018, defendants filed motions seeking the 

entry of summary judgment in their favor. Defendants’ summary judgment motions 

were heard before the trial court at the 11 June 2018 civil session of Superior Court, 

Brunswick County. On 31 July 2018, the trial court entered an order granting 

defendants’ motions for summary judgment in their entirety. Plaintiffs noted an 

appeal to the Court of Appeals from the trial court’s order.

C. Court of Appeals Decision

 

2 Although plaintiffs asserted claims against defendants Thornley Holdings, LLC; 

David H. Roos; Margaret N. Singer; and Ms. Durham in their amended complaint, they 

voluntarily dismissed those claims prior to the entry of the trial court’s summary judgment

order. As a result, we will refrain from discussing plaintiffs’ claims against these additional 

defendants in this opinion.
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¶ 20 In seeking relief from the trial court’s order before the Court of Appeals, 

plaintiffs argued that the trial court had erred by granting summary judgment in 

favor of all defendants. After affirming the trial court’s decision to grant summary 

judgment in defendants’ favor with respect to plaintiffs’ claims for (1) negligence 

against Rudd & Associates, Ms. Rudd-Gaglie, and Mr. Goodman; (2) negligent 

misrepresentation against Rudd & Associates, Ms. Rudd-Gaglie, Mr. Goodman, 

Re/Max, and Mr. Carroll; (3) unfair and deceptive trade practices against Berkeley

Investors, Mr. Bell, Re/Max, and Mr. Carroll; (4) breach of contract against Mr. Bell; 

(5) breach of the implied covenant of good faith and fair dealing against Berkeley

Investors and Mr. Bell; and (6) personal liability against Mr. Bell, the Court of 

Appeals unanimously reversed the trial court’s decision to grant summary judgment 

in favor of defendants with respect to plaintiffs’ claims for negligent 

misrepresentation and fraud against Berkeley Investors and Mr. Bell. Cummings v. 

Carroll, 270 N.C. App. 204, 235 (2020). Finally, although a majority of the Court of 

Appeals voted to reverse the trial court’s decision to grant summary judgment in 

favor of defendants with respect to plaintiffs’ claims for (1) negligence against Re/Max 

and Mr. Carroll; (2) fraud and fraud in the inducement against Re/Max and Mr.

Carroll; (3) fraud by concealment against Re/Max and Mr. Carroll; and (4) breach of 

fiduciary duty against Rudd & Associates, Ms. Rudd-Gaglie, and Mr. Goodman, id.,

Judge Arrowood dissented from this aspect of his colleagues’ decision. Re/Max, Mr.
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Carroll, Rudd & Associates, Ms. Rudd-Gaglie, and Mr. Goodman noted an appeal to 

this Court from the Court of Appeals’ decision based upon Judge Arrowood’s dissent. 

This Court allowed a petition for discretionary review with respect to additional 

issues filed by Berkeley Investors and Mr. Bell on 18 December 2020.3

II. Substantive Legal Analysis

A. Standard of Review

¶ 21 This Court reviews decisions arising from trial court orders granting or 

denying motions for summary judgment using a de novo standard of review. Dallaire 

v. Bank of Am., N.A., 367 N.C. 363, 367 (2014). The entry of an order granting 

summary judgment in favor of a particular party is appropriate when “the pleadings, 

depositions, answers to interrogatories, and admissions on file, together with the 

affidavits, if any, show that there is no genuine issue as to any material fact and that 

any party is entitled to a judgment as a matter of law.” N.C.G.S. § 1A-1; Rule 56(c)

(2019). In evaluating the appropriateness of a trial court’s decision to grant or deny 

a summary judgment motion in a particular case, “we view the pleadings and all other 

evidence in the record in the light most favorable to the nonmovant and draw all 

reasonable inferences in that party’s favor.” N.C. Farm Bureau Mut. Ins. Co. v. 

 

3 As a result of the fact that plaintiffs have not sought review of the Court of Appeals’

decision to affirm the trial court’s decision to grant summary judgment in favor of defendants 

with respect to certain claims that were asserted in their amended complaint, we will not 

consider the correctness of the relevant aspects of the Court of Appeals’ decision in this 

opinion.
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Sadler, 365 N.C. 178, 182 (2011). Although the party seeking the entry of summary 

judgment in its favor “bears the burden of establishing that there is no triable issue 

of material fact,” the burden shifts to the nonmoving party to “produce a forecast of 

evidence demonstrating that the [nonmoving party] will be able to make out at least 

a prima facie case at trial” in the event that the moving party makes the necessary 

preliminary showing. DeWitt v. Eveready Battery Co., 355 N.C. 672, 681–82 (2002)

(quoting Collingwood v. Gen. Elec. Real Est. Equities, Inc., 324 N.C. 63, 66 (1989))

(alteration in original).

B. Economic Loss Rule

¶ 22 As an initial matter, Berkeley Investors and Mr. Bell and Re/Max and Mr. 

Carroll argue that certain claims that plaintiffs have asserted against them are 

barred by the economic loss rule.4 In rejecting this contention, the Court of Appeals

held that the economic loss rule did not provide any protection against the claims 

that plaintiffs had asserted against these defendants because none of the conduct 

that allegedly underlay those claims implicated the terms of the purchase contract 

between plaintiffs and Berkeley Investors. Cummings, 270 N.C. App. at 219. In 

addition, the Court of Appeals concluded that Re/Max and Mr. Carroll were not 

 

4 Rudd & Associates, Ms. Rudd-Gaglie, and Mr. Goodman did successfully invoke the 

economic loss rule in opposition to certain claims that plaintiffs had asserted against them 

in light of the provisions of the buyer’s agency agreement. However, no party has sought or 

obtained review of the Court of Appeals’ decision with respect to these claims before this 

Court.
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entitled to claim the protections of the economic loss rule because they lacked privity 

of contract with plaintiffs. Id. We conclude that the Court of Appeals correctly 

resolved this issue.

¶ 23 “[T]he economic loss rule bars recovery in tort by a plaintiff against a promisor 

for his simple failure to perform his contract, even though such failure was due to 

negligence or lack of skill.” Crescent Univ. City Venture, LLC v. Trussway Mfg., Inc., 

376 N.C. 54, 58 (2020) (cleaned up); see also N.C. State Ports Auth. v. Lloyd A. Fry 

Roofing Co., 294 N.C. 73, 81 (1978) (observing that, “[o]rdinarily, a breach of contract 

does not give rise to a tort action by the promisee against the promisor”). In such 

situations, “[i]t is the law of contract and not the law of negligence which defines the 

obligations and remedies of the parties,” Boone Ford, Inc. v. IME Scheduler, Inc., 262 

N.C. App. 169, 174 (2018), with the purpose of the economic loss rule being to prevent 

“contract law [from] drown[ing] in a sea of tort,” E. River S.S. Corp. v. Transamerica 

Delaval, Inc., 476 U.S. 858, 866 (1986).

¶ 24 Plaintiffs’ remaining claims for negligent misrepresentation and fraud against 

Berkeley Investors and Mr. Bell and for negligence and fraud against Re/Max and 

Mr. Carroll center on the alleged failure of those defendants to disclose or adequately 

repair any defects in the house and upon Berkeley Investors’ alleged 

misrepresentations concerning the condition of the house. Specifically, plaintiffs 

allege that the relevant defendants failed to disclose the existence of a long history of 
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water-intrusion issues at the house and unreasonably relied upon Mr. Cribb’s

assurances that he had fully repaired the problem prior to closing. In our view, the 

Court of Appeals correctly concluded that none of these allegations rely upon the 

relevant contractual provisions.

¶ 25 According to Berkeley Investors and Mr. Bell and Re/Max and Mr. Carroll, the 

disclosure statement upon which these claims rely constitutes a part of the purchase

contract, so that claims relating to the disclosure statement implicate contractual 

duties for purposes of the economic loss rule. In support of this assertion, the relevant 

defendants direct our attention to N.C.G.S. § 47E-5(a), which authorizes the inclusion 

of a residential property disclosure statement into a contract for the sale of real 

estate, and point out that Paragraph 5 of the North Carolina Standard Form 2-T Offer 

to Purchase and Contract relating to the “Buyer Representations,” which was used in 

this transaction, explicitly incorporates the disclosure statement into the purchase

contract.

¶ 26 A careful examination of Standard Form 2-T reveals, however, that the 

document in question simply acknowledges that “Buyer has received a signed copy of 

the N.C. Residential Property and Owners’ Association Disclosure Statement prior to 

the signing of this offer.” For that reason, the language upon which Berkeley 

Investors and Mr. Bell and Re/Max and Mr. Carroll rely in support of their economic 

loss rule arguments represents nothing more than an acknowledgement that the 
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owner had complied with its obligation to provide a residential disclosure statement 

to the purchaser without addressing the substance of the disclosure statement. See

N.C.G.S. § 47E-5 (2019). As the Court of Appeals recognized, the disclosure 

statement also indicates that purchasers “understand that this is not a warranty by 

owners or owner’s agent,” with nothing in the contract serving to make the 

representations contained in the disclosure statement part of the terms of the 

purchase contract. Thus, since the substance of the disclosure statement is not 

incorporated into the purchase contact, it cannot serve as the basis for the application 

of the economic loss rule in this case.

¶ 27 In seeking to persuade us to reach a contrary conclusion, Berkeley Investors 

and Mr. Bell and Re/Max and Mr. Carroll point to our statement in Crescent 

University City Venture that:

[w]hen a plaintiff asserts that the subject matter of a 

contract has, in its operation or mere existence, caused 

injury to itself or failed to perform as bargained for, the 

damages are merely economic, and a purchaser has no 

right to assert a claim for negligence against the seller . . . 

for those economic losses under the economic loss rule.

376 N.C. at 62. The principle enunciated in Crescent University City Venture, which

involved a claim brought by the owner of a tract of real estate and a subcontractor 

based upon the allegedly negligent construction of a critical component of an 

apartment complex, does not control in this instance given that the present case arose 

in the context of a subsequent sale of an existing residence between individuals or 
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privately held entities that the individual participants controlled rather than in the 

context of a large commercial real estate transaction in which the rights and 

responsibilities of the parties were comprehensively controlled by a series of interrelated contracts and sub-contracts.

¶ 28 In its opinion in this case, the Court of Appeals referenced its own decision in

Bradley Woodcraft, Inc v. Bodden, in which it had held that, “while claims for 

negligence are barred by the economic loss rule where a valid contract exists between 

the litigants, claims for fraud are not so barred and, indeed, the law is, in fact, to the 

contrary: a plaintiff may assert both claims.” 251 N.C. App. 27, 34 (2016) (cleaned 

up). According to Berkeley Investors and Mr. Bell, Bradley Woodcraft should not be 

understood as categorically excluding fraud claims from the reach of the economic 

loss rule, citing decisions by the United States Court of Appeals in Broussard v. 

Meineke Disc. Muffler Shops, Inc., 155 F.3d 331 (4th Cir. 1998), and Legacy Data 

Access, Inc. v. Cadrillion, LLC, 889 F.3d 158 (4th Cir. 2018), and pointing to the 

Fourth Circuit’s statement in Legacy Data Access that “Bradley Woodcraft is simply 

another application of the principle that the economic loss rule does not bar tort 

claims based on an independent legal duty, which is identifiable and distinct from the 

contractual duty,” Legacy Data Access, Inc., 889 F.3d at 166 (cleaned up).

¶ 29 Aside from the fact that this Court is not bound by the Fourth Circuit’s 

interpretation of North Carolina state law, State ex rel. Martin v. Preston, 325 N.C. 
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438, 449–50 (1989), any decision to adopt the Fourth Circuit’s reasoning in Legacy 

Data Access would not change the outcome in this case. As we have already noted, 

the allegedly tortious conduct at issue in this case cannot have constituted a violation 

of the purchase contract because the representations set out in the disclosure 

agreement were not incorporated into that document. As a result, even if the Court 

of Appeals did categorically exempt fraud claims from the economic loss rule in 

Bradley-Woodcraft and even if Bradley-Woodcraft was decided in error, the adoption 

of such a rule would not preclude the assertion of plaintiffs’ fraud and negligent 

misrepresentation claims against Berkeley Investors and Mr. Bell in this case. As a 

result, the Court of Appeals did not err by holding that the economic loss rule did not 

bar the assertion of fraud claims against Berkeley Investors, Mr. Bell, Re/Max, and 

Mr. Carroll and the negligent misrepresentation claim against Berkeley Investors 

and Mr. Bell that rests upon the contents of the disclosure statement that was 

provided to plaintiffs.

¶ 30 Although our conclusion that the disclosure statement was not a term of the

purchase contract seems to us to adequately support a decision to affirm the Court of 

Appeals’ decision with respect to this issue, we will take this opportunity to address 

the privity of contract issue as it relates to Re/Max and Mr. Carroll. The Court of 

Appeals held that, even if the plaintiffs’ negligent misrepresentation and fraud claims 

against Berkeley Investors and Mr. Bell were barred by the economic loss rule, 
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Re/Max and Mr. Carroll were not entitled to claim the protections of the economic 

loss rule because they were not parties to the purchase contract. Cummings, 270 

N.C. App. at 219. Arguing in reliance upon the Court of Appeals’ decision in Simmons 

v. Cherry, 43 N.C. App. 499 (1979), Re/Max and Mr. Carroll assert that, in light of the 

statements that Mr. Carroll had made and the conduct in which Mr. Carroll had

engaged for the purpose of ensuring that the transaction closed during the course of 

his representation of Berkeley Investors and its owners, Mr. Carroll had bound 

himself to the terms of the purchase contract and was entitled to the same economic

loss rule protections as Berkeley Investors and Mr. Bell. We are not, however, 

persuaded that, aside from its status as a decision of the Court of Appeals rather than 

of this Court, Simmons should be deemed controlling in this case.

¶ 31 In Simmons, the president of a corporation contracted with a real estate 

appraiser for the purpose of obtaining the performance of a feasibility study. The 

corporation’s president did not, at any point during the transaction, mention any 

involvement on the part of the corporation and, instead, provided a personal 

assurance that the appraiser’s bill would be paid. Simmons, 43 N.C. App. at 499–

500. In light of these facts, the Court of Appeals concluded that the record contained 

sufficient support for a finding that the president had bound himself to the contract. 

Id. at 501. In this case, on the other hand, the record contains no evidence suggesting 

that Mr. Carroll had similarly bound “himself to performance of the contract and 
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personal liability therefore.” Id. As a result, we agree with the Court of Appeals’ 

determination that Re/Max and Mr. Carroll lacked the privity of contract necessary 

to support the invocation of the economic loss rule.

C. Negligence

¶ 32 Next, we consider the viability of plaintiffs’ negligence claims against Re/Max 

and Mr. Carroll. In reversing the trial court’s decision to grant summary judgment 

in defendant’s favor with respect to these claims, the Court of Appeals held that the 

record disclosed the existence of a genuine issue of material fact concerning the extent 

to which Re/Max and Mr. Carroll had a duty to disclose the history of water intrusion

into the house given the equivocal nature of Mr. Cribb’s statements about the extent 

to which he had repaired the leak that he had been hired to address. Cummings, 270 

N.C. App. at 218. We agree.

¶ 33 “[U]nder established common law negligence principles, a plaintiff must offer 

evidence of four essential elements in order to prevail: duty, breach of duty, proximate 

cause, and damages,” Estate of Mullis v. Monroe Oil Co., 349 N.C. 196, 201 (1998), 

with “[a]ctionable negligence [being] the failure to exercise that degree of care which 

a reasonable and prudent person would exercise under similar conditions.” Hart v. 

Ivey, 332 N.C. 299, 305 (1992). In their amended complaint and on appeal to the 

Court of Appeals, plaintiffs asserted that Re/Max and Mr. Carroll owed them a 

number of legal duties, including the duty to (1) “take all reasonable steps to ascertain 
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all known and readily available material facts about the condition” of the house; (2) 

make specific inquiry of the owners, including Berkeley Investors and Mr. Bell, for 

the purpose of obtaining information relating to facts or circumstances that may

materially affect plaintiffs’ decision to purchase the house; (3) “take all reasonable 

steps” to ensure that any prior leaks or water-intrusion problems had been repaired 

by a licensed professional; and (4) ensure that the disclosure statement was accurate,

that the house did not contain any defects and that Re/Max and Mr. Carroll had 

breached those duties by, among other things, (1) failing to discover and correct any 

material defects in the house or to disclose the defects to plaintiffs; (2) hiring Mr.

Cribb, who was a painter, to fix a suspected leak in the guest level living room; (3) 

permitting Berkeley Investors to provide a disclosure statement that stated that the 

house did not have any known defects; and (4) failing to disclose the history of waterintrusion problems at the house.

¶ 34 We have previously held that a real estate broker:

who makes fraudulent misrepresentations or who conceals 

a material fact when there is a duty to speak to a 

prospective purchaser in connection with the sale of the 

principal’s property is personally liable to the purchaser 

notwithstanding that the broker was acting in the capacity 

of agent for the seller.

Johnson v. Beverly-Hanks & Assocs., Inc., 328 N.C. 202, 210 (1991) (quoting P. 

Hetrick & J. McLaughlin, Webster’s Real Estate Law in North Carolina § 132, at 165 

(3d ed. 1988)). Put another way, “[a] broker has a duty not to conceal from the 
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purchasers any material facts and to make full and open disclosure of all such 

information.” Id. According to the Court of Appeals’ decision in Clouse v. Gordon, a 

real estate broker’s duty to share information with a buyer is limited to “material 

facts known to the broker and to representations made by the broker.” 115 N.C. App. 

500, 508 (1994) (emphasis added).

¶ 35 Acting in reliance upon Clouse, the Court of Appeals rejected plaintiffs’

contention that the failure of Re/Max and Mr. Carroll to discover “ascertainable” 

defects in the house rendered those defendants negligent given that “a seller’s agent 

only has a duty to disclose material facts that are known to him.” Cummings, 270 

N.C. App. at 217 (emphasis added). In addition, the Court of Appeals held that 

Re/Max and Mr. Carroll “owed [p]laintiffs no duty to ensure that the [h]ouse was in 

any particular condition at the time of closing” and could not, for that reason, be liable 

in negligence for any failure to make necessary repairs. Id. Finally, the Court of 

Appeals concluded that Re/Max and Mr. Carroll could not be found negligent based 

upon the theory that they had provided plaintiffs with the disclosure statement

because (1) they did not sign it, (2) the disclosure statement provided that “the 

representations are made by the owner and not the owner’s agent(s) or subagent(s),” 

and (3) the disclosure statement included representations regarding the actual 

knowledge possessed by Berkeley Investors. Id.
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¶ 36 Although the Court of Appeals was correct in reaching all of these conclusions, 

that fact does not completely resolve the issue of whether Re/Max and Mr. Carroll 

can be held liable to plaintiffs on the basis of negligence. As we have already noted, 

a real estate broker must disclose all material facts that he or she knows to the 

potential buyer, with such “material facts” including those that an agent “knows or 

should know would reasonably affect the [purchaser’s] judgment.” Brown v. Roth, 

133 N.C. App. 52, 55 (1999) (quoting James A. Webster, Jr., Webster’s Real Estate 

Law in North Carolina §§ 8–9, at 243 (4th ed. 1994)). In other words, Re/Max and 

Mr. Carroll had a duty to disclose any fact of which they were aware that might 

reasonably have impacted plaintiffs’ decision to purchase the house.

¶ 37 A careful review of the record discloses the existence of evidence tending to 

show that Mr. Carroll knew of previous water-intrusion issues at the house and that 

he had hired Mr. Cribb to, among other things, attempt to locate and repair the source 

of a leak in the guest-level living room. After completing the required work, Mr. Cribb 

sent a text message to Mr. Carroll informing Mr. Carroll that he “may have found 

that leak” and that he “hope[d] that was it.” Re/Max and Mr. Carroll point to this

communication in arguing that Mr. Carroll “was told that the condition had been 

repaired” and contend, in reliance upon Clouse, in which the Court of Appeals held 

that a real estate agent could not be held liable for relying upon an opinion provided 

by a professional surveyor whose survey map failed to indicate that the property was
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located in a flood hazard zone, Clouse, 115 N.C. App. at 503, 509–10, that Mr. Carroll

had reasonably relied upon the assurance that he had received from Mr. Cribb, whom

Re/Max and Mr. Carroll describe as an “experienced professional,” in failing to 

disclose the existence of the relevant incident of water intrusion to plaintiffs. In 

response, plaintiffs challenge the adequacy of Mr. Cribb’s professional qualifications

and the reasonableness of Mr. Carroll’s reliance upon Mr. Cribb’s statements given 

their ambiguous and uncertain nature.

¶ 38 A careful review of the record precludes us from holding that the 

reasonableness of Mr. Carroll’s reliance upon Mr. Cribb’s statements has been 

established as a matter of law. Despite Re/Max and Mr. Carroll’s characterization of 

Mr. Cribb as an “experienced professional,” he was a painter and pressure washer 

rather than a licensed contractor. Moreover, even if one was to accept Mr. Cribb’s 

qualifications as sufficient, the equivocal nature of the statements made in the text 

messages upon which Re/Max and Mr. Carroll rely raises a genuine issue of material 

fact concerning the extent to which Mr. Carroll reasonably relied upon those

statements in failing to disclose to plaintiffs the existence of this instance of water 

intrusion into the house. Thus, unlike the situation at issue in Clouse, in which the 

qualifications of the relevant professional and the clarity of that professional’s

assurances do not appear to have been in question, the same cannot be said of either 

Mr. Cribb or the statements that he made to Mr. Carroll. See Clouse, 115 N.C. App. 
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at 508–09. As a result, a rational juror could properly conclude that Mr. Carroll acted 

unreasonably in relying upon the adequacy of Mr. Cribb’s performance in rectifying 

the problems evidenced by the water intrusion into the house.

¶ 39 Both Re/Max and Mr. Carroll, in their brief, and Judge Arrowood, in his 

dissenting opinion at the Court of Appeals, argue that the home inspection conducted

by Mr. Williams, in which the inspector failed to discover that the house had waterintrusion problems, provided further evidence that Mr. Carroll had reasonably 

concluded that the water-intrusion issue that Mr. Cribb had been hired to address 

had been adequately repaired. Cummings, 270 N.C. App. at 238 (Arrowood, J., 

concurring, in part, and dissenting, in part). Although a home inspection might, 

under other circumstances, suffice to preclude a finding of potential liability on the 

part of the agent representing the seller in a real estate transaction, the record before 

us in this case, which includes evidence tending to show that Mr. Cribb was primarily 

hired to repaint, rather than repair, the affected area; that the damage to the home 

was extensive and longstanding; that Mr. Moore testified that efforts had been made 

to conceal the extent of the water intrusion that had occurred at the home, that the 

nature and extent of the damage to the house was not immediately apparent, and

that there was no reason for either Mr. Williams or plaintiffs to have conducted 

further investigation in light of that fact coupled with the fact that Mr. Williams 

testified that he did not find any evidence of water intrusion or moisture damage that
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would have prompted him to conduct moisture testing, precludes such a result in this 

instance. Thus, the results of the inspection performed by Mr. Williams fail to justify 

a determination that, as a matter of law, the record does not disclose the existence of 

a genuine issue of material fact relating to plaintiffs’ negligence-based claimes resting 

upon the failure of Re/Max and Mr. Carroll to disclose to plaintiffs the existence of 

water intrusion into the house.

D. Negligent Misrepresentation

¶ 40 The Court of Appeals held, with respect to plaintiffs’ claim against Berkeley 

Investors and Mr. Bell for negligent misrepresentation, that the record disclosed the 

existence of a genuine issue of material fact concerning whether (1) Berkeley 

Investors and Mr. Bell reasonably relied upon the work performed by Mr. Cribb and 

(2) the inspection conducted by Mr. Williams amounted to “reasonable diligence” 

entitling plaintiffs to rely upon the representations made in the disclosure statement. 

Cummings, 270 N.C. App. at 223–24. We agree.

¶ 41 “The 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.” Dallaire, 367 N.C. at 369 (quoting Raritan River 

Steel Co. v. Cherry, Bekaert & Holland, 322 N.C. 200, 206 (1988)). However, “[a] party 

cannot establish justified reliance on an alleged misrepresentation if the party fails 

to make reasonable inquiry regarding the alleged statement.” Id. The extent to 
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which a party justifiably relied upon items of information is generally a question of 

fact for the jury in the absence of a showing that “the facts are so clear as to permit 

only one conclusion.” Marcus Bros. Textiles, Inc. v. Price Waterhouse, LLP, 350 N.C. 

214, 225 (1999) (quoting Restatement (Second) of Torts § 552 cmt. e (1977)).

¶ 42 As an initial matter, Berkeley Investors and Mr. Bell argue that they did not 

make any misrepresentations in the disclosure statement given that, in spite of their 

knowledge that there had been a leak in the house, they reasonably relied upon the 

assurances that had been received from Mr. Cribb, as conveyed to them by Mr. 

Carroll, that the leak had been fixed. In support of this assertion, Berkeley Investors 

and Mr. Bell direct our attention to the unpublished decision of the Court of Appeals 

in Dykes v. Long, which addressed the issue of whether the seller of a house had 

fraudulently represented in a disclosure statement that she had no knowledge of 

defects in a house in spite of the fact that she had previously discovered the existence 

of cracks in the front porch and had had them repaired by a general contractor. Dykes 

v. Long, No. COA14-148, 2014 WL 2993986, at *3 (N.C. Ct. App. July 1, 2014) 

(unpublished). In holding that the sellers’ conduct in failing to disclose the crackrelated problems of which they were aware did not constitute actionable fraud, the 

Court of Appeals emphasized that the sellers had taken steps to address the problem, 

had been assured by the contractor that the problem in question had been rectified, 

and had observed no further problems with respect to the porch prior to closing. Id. 
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Similarly, Berkeley Investors and Mr. Bell contend that they cannot be held liable to 

plaintiffs for negligent misrepresentation given that they had received assurances 

from Mr. Carroll that the leak had been repaired, that Mr. Cribb was fully qualified 

to repair the leak in light of his extensive experience in performing painting and 

general repair work, and that no further problems had been observed in the house

after the performance of the relevant repair work.

¶ 43 As we have already indicated in addressing the negligence-related claims that 

plaintiffs have asserted against Re/Max and Mr. Carroll, the record does, in fact, 

contain evidence tending to show “that [Mr.] Cribb was not qualified to fix the leak 

in the guest level ceiling,” including, but not limited to, the fact that Mr. Cribb was 

not a licensed contractor and claimed to be engaged in the business of painting and 

pressure washing, the fact that Mr. Cribb testified that he could not specifically

remember having identified and repaired any leaks in the house, and the fact that 

Mr. Cribb acknowledged that he had not done any work that involved penetrating the 

interior walls of the house. As a result, aside from the fact that Dykes has no 

precedential value, N.C. R. App. P. 30(4)(3), this case is distinguishable from Dykes

given the existence of a conflict in the evidence concerning the nature and extent of 

Mr. Cribb’s ability to repair leaks and the fact that, while the problems at issue in 

Dykes did not reappear until sixteen years after performance of the necessary repair 

work, only a few months had elapsed between the date upon which Mr. Cribb worked 
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on the house and the plaintiffs’ discovery that extensive water-related damage had 

occurred to that structure. See Dykes, 2014 WL 2993986, at *3. As a result, we hold 

that, when the evidence in the present record is taken in the light most favorable to 

plaintiffs, it discloses the existence of genuine issues of material fact concerning the 

reasonableness of Berkeley Investors’ and Mr. Bell’s reliance upon the repair work 

that Mr. Cribb performed.

¶ 44 In addition, Berkeley Investors and Mr. Bell argue that, even if they were not 

entitled to rely upon the repair work performed by Mr. Cribb in preparing the 

disclosure statement that they delivered to plaintiffs, plaintiffs were not entitled to 

rely upon the representations made in the disclosure statement given that they had 

an obligation to perform their own investigation into the condition of the property 

and failed to do so. In support of this assertion, Berkeley Investors and Mr. Bell

direct our attention to Stevens v. Heller, in which the Court of Appeals stated that a

purchaser of real estate is “not entitled to rely solely on the property disclosure 

statement prepared by the seller and conduct no independent due diligence . . . unless 

the buyer can show that the seller’s misrepresentations caused the lack of reasonable 

diligence.” 268 N.C. App. 654, 660 (2019).

¶ 45 According to Berkeley Investors and Mr. Bell, plaintiffs should have been 

aware of the need to conduct a further investigation into the condition of the house 

for a number of reasons, including (1) the presence of language in the disclosure 
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statement disclaiming any warranties and recommending that plaintiffs retain a

licensed home inspector; (2) the existence of language in the purchase contract 

indicating that the house was being sold in its “current condition” and disclaiming all

warranties; (3) the fact that Mr. Williams noted the need to seal areas on the exterior 

of the house and to rectify problems with windows and doors that would either not 

open and close or would not seal properly; and (4) the statement in Mr. Williams’ 

report that he had “attempt[ed] to find a leak but sometimes cannot” and his

“recommend[ation] that qualified contractors be used” to inspect and repair the

problems identified in the report. According to Berkeley Investors and Mr. Bell, this 

information should have prompted plaintiffs to request that Mr. Williams conduct 

additional testing for the presence of moisture and rendered plaintiffs’ reliance upon 

the representations contained in the disclosure statement unreasonable as a matter 

of law.

¶ 46 In light of the fact-intensive nature of the relevant inquiry, “[t]he 

reasonableness of a party’s reliance is a question for the jury, unless the facts are so 

clear that they support only one conclusion.” Forbis v. Neal, 361 N.C. 519, 527 (2007). 

Unlike the plaintiffs in Stevens, who failed to conduct any inspection of the relevant

property prior to the closing, 268 N.C. App. at 656, plaintiffs hired a licensed home 

inspector and general contractor for the purpose of performing a home inspection. As 

a result, the operative question for the purpose of this case is whether obtaining the 
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performance of the inspection conducted by Mr. Williams constituted “reasonable 

diligence” on the part of plaintiffs or whether plaintiffs should have obtained 

additional inspections, including the performance of more intrusive moisture testing.

¶ 47 According to Mr. Williams, the absence of any visual evidence tending to 

suggest the existence of a moisture problem with the house rendered the performance 

of intrusive moisture testing unnecessary, a determination that Mr. Moore 

characterized as reasonable. In addition, as the majority at the Court of Appeals 

observed, the “alleged efforts [by Berkeley Investors and Mr. Bell] to conceal the 

water-intrusion issues might have caused [p]laintiffs to forego moisture testing and 

more reasonably rely upon the [d]isclosure [s]tatement where [p]laintiffs otherwise 

might not have.” Cummings, 270 N.C. App. at 224. As a result, the record contains 

ample evidence tending to show that plaintiffs reasonably relied upon Mr. Williams’ 

inspection report.

¶ 48 In seeking to persuade us to reach a different result, Berkeley Investors and 

Mr. Bell, along with the dissenting opinion at the Court of Appeals, emphasize the 

problems with the house that Mr. Williams identified in his report, including (1) the 

presence of minor roof damage; (2) the need to seal certain locations on the exterior 

of the house for the purpose of excluding water and insects; (3) the existence of doors 

that failed to either close or seal property; (4) the presence of windows that exhibited

rust stains and would not open; and (5) the existence of minor leaks that could lead 
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to the development of mold and the recommendation that Mr. Williams made at 

numerous locations in his report that “qualified contractors be used in your further 

inspection or repair issues as it relates to the comments in this inspection report.”

However, we do not believe that any of this information would have necessarily put 

plaintiffs on notice that the house might have a serious water-intrusion problem. For 

example, the reference in the inspection report to leaks “causing mold to grow” 

involved a condensation line that drained under the house, with mold having

developed on the concrete foundation, rather than anything relating to the structure’s 

walls. Similarly, in discussing the areas on the exterior of the house that needed

sealing, Mr. Williams stated that “a handy-man can easily make these repairs,” a 

comment that could reasonably be interpreted to suggest that a more in-depth 

inspection of these areas was not required. In addition, none of the problems

mentioned in Mr. Williams’ report appear to have been related to either any repair 

work that Mr. Cribb performed or the extensive water damage problem that Mr. 

Moore identified. Finally, the recommendation that qualified contractors be used for 

further inspection and repair work, aside from appearing to be generically applicable

“boilerplate” language rather than a recommendation that plaintiffs take any 

particular action, relates to “the comments in this inspection report,” none of which 

pertained to moisture intrusion into the walls of the house or the need for further 

testing of the house for its presence.
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¶ 49 In addition, Berkeley Investors and Mr. Bell, along with the dissenting opinion 

at the Court of Appeals, rely upon MacFadden v. Louf, in which the Court of Appeals 

held that a home buyer could not reasonably rely upon alleged misrepresentations

contained in a disclosure statement “because [the buyer] conducted a home inspection 

before closing and that inspection report put her on notice of potential problems with 

the home.” 182 N.C. App. 745, 748 (2007). MacFadden is distinguishable from this 

case, however, given that the inspection report at issue there specifically instructed 

the plaintiff to hire a roofing contractor in light of the existence of extensive evidence

tending to suggest that a potential for water to pond existed, with this evidence 

including the presence of stains on the chimney and in the attic area; the fact that 

the floor sagged, deflected, and was uneven; and the fact that other evidence of 

moisture and pest infestation was present. Id. As we have already noted, the report 

that Mr. Williams prepared concerning the house that is at issue in this case made 

only generalized comments about the need for further inspections and did not suggest 

that any significant amount of water intrusion had occurred.

¶ 50 Admittedly, plaintiffs could have engaged in additional investigative activities, 

including requesting Oak Island Accommodations’ maintenance records or having 

more intrusive moisture testing performed. On the basis of the present record,

however, the extent to which plaintiffs’ failure to take such additional steps

constituted a failure to exercise “reasonable diligence” is a question of fact for the jury 
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rather than a question of law for the Court. As a result, after viewing the record

evidence in the light most favorable to the plaintiffs, we hold that there are genuine 

issues of material fact concerning the extent to which Berkeley Investors and Mr. Bell

reasonably relied upon Mr. Cribb’s repair work in representing in the disclosure 

statement that they did not know of the existence of any water-intrusion problems

and the extent to which plaintiffs reasonably relied upon these statements in light of 

the inspection performed by Mr. Williams.

E. Fraud

¶ 51 According to the Court of Appeals, the record also disclosed the existence of 

genuine issues of material fact concerning the extent to which Berkeley Investors and 

Mr. Bell defrauded plaintiffs by providing them with a disclosure statement that 

contained untruthful information concerning the condition of the house and whether 

Berkeley Investors, Mr. Bell, Re/Max and Mr. Carroll defrauded plaintiffs by failing 

to disclose the existence of the history of water-intrusion problems at the house and 

the nature and extent of the steps that had been taken for the purpose of addressing

those problems.5 Cummings, 270 N.C. App. at 233–34. Once again, we conclude that 

the Court of Appeals reached the correct decision with respect to this issue.

 

5 Although plaintiffs identified Mr. Carroll’s assertion that he would buy the house as 

evidence of fraud, the Court of Appeals concluded that this statement constituted “mere 

puffing” rather than actionable fraud, having reached this result in reliance upon Rowan 

County Board of Education v. United States Gypsum Co., 332 N.C. 1, 17 (1992). Plaintiffs 
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¶ 52 As an initial matter, plaintiffs asserted separate claims for “fraud and fraud in 

the inducement” and “fraud by concealment” in their amended complaint. The Court 

of Appeals concluded that, “[b]ecause: (1) the purportedly distinct causes of action 

each allege false representations or omissions in inducing [p]laintiffs to purchase the 

[h]ouse; and (2) the respective elements of fraud, fraud in the inducement, and 

fraudulent concealment overlap on these facts,” it would analyze plaintiffs’ fraud 

claims “as separate theories of a single cause of action alleging fraud in the 

inducement.” Cummings, 270 N.C. App. at 229. We conclude that the approach 

adopted by the Court of Appeals with respect to this issue was a reasonable one and 

will adopt it as our own.

¶ 53 As we have previously stated, “[f]raud has no all-embracing definition”; 

instead, as a general proposition, fraud “may be said to embrace all acts, omissions, 

and concealments involving a breach of legal or equitable duty and resulting in 

damage to another, or the taking of undue or unconscientious advantage of another.” 

Vail v. Vail, 233 N.C. 109, 113 (1951) (cleaned up). The following essential elements 

of actionable fraud are well established: “(1) False 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.” Forbis, 

 

did not seek further review of this aspect of the Court of Appeals’ decision by this Court, 

which renders it final for purposes of further proceedings in this case. See N.C. R. App. P. 

28(b)(6).
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361 N.C. at 526–27 (quoting Ragsdale v. Kennedy, 286 N.C. 130, 138 (1974)). On the 

other hand, “any reliance on the allegedly false representations must be reasonable.” 

Id. at 527 (citing Johnson v. Owens, 263 N.C. 754, 757 (1965)).

¶ 54 Berkeley Investors, Mr. Bell, Re/Max, and Mr. Carroll argue that they are not 

liable for fraud for the same essential reasons that cause them to contend that a 

finding of liability on the basis of negligence would be inappropriate. Berkeley

Investors and Mr. Bell insist that (1) neither the record nor the applicable law provide 

any support for a finding that they knowingly made a false statement in the 

disclosure statement and that (2), even if they made such a statement, plaintiffs 

cannot show that they reasonably relied upon the alleged misrepresentations. More 

specifically, Berkeley Investors and Mr. Bell assert that Mr. Carroll, who represented 

them in the relevant transaction, had no obligation to inform plaintiffs of the 

existence of the leak that had been repaired by Mr. Cribb given Mr. Cribb’s 

assurances that the leak had been successfully remediated and that it was reasonable 

for everyone involved to rely upon Mr. Cribb’s professional judgment. In addition, 

Berkeley Investors and Mr. Bell argue that plaintiffs could not reasonably rely on the 

representations made in the disclosure statement given their failure to heed the 

recommendations set out in that document, the purchase contract, and Mr. Williams’

report that they obtain additional inspections of the house. Similarly, Re/Max and 

Mr. Carroll contend that Mr. Carroll “did not have a duty to disclose the condition of 
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the repaired leak because he justifiably relied on [Mr. Cribb’s] representations that 

the leak was repaired and believed (also based on months of observation and the 

findings of other professionals) the leak to be repaired.” In their view, plaintiffs could 

not prove that Berkeley Investors, Mr. Bell, Re/Max, or Mr. Carroll knew of the 

existence of any problems that had not been reported in the disclosure statement, 

with plaintiffs having been put on notice of the existence of additional potential 

problems that they failed to adequately investigate.

¶ 55 We are unable, for the reasons set forth above, to accept the validity of any of 

these arguments. In our view, as the Court of Appeals correctly determined, the 

record discloses the existence of genuine issues of material fact concerning (1) the

reasonableness of any reliance that Berkeley Investors, Mr. Bell, Re/Max, and Mr. 

Carroll may have placed upon the repair work performed by Mr. Cribb and (2) 

whether plaintiffs reasonably relied upon the inspection report prepared by Mr.

Williams. Although we have focused much of our discussion of this issue upon the 

reasonableness of the reliance placed by Berkeley Investors, Mr. Bell, Re/Max, and 

Mr. Carroll upon the repair work performed by Mr. Cribb and the reliance placed 

upon Mr. Williams’ report by plaintiffs, we have not lost sight of the fact that the 

record contains evidence tending to show that significant water intrusion had 

occurred in the past and that Berkeley Investors and Mr. Bell knew of the existence 

of this condition. After acknowledging that the maintenance records maintained by 
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Oak Island Accommodations showed that water intrusion had occurred at the house 

in the past, Berkeley Investors, Mr. Bell, Re/Max, and Mr. Carroll insist that the 

records “also show that each and every issue was addressed and resolved” and that 

plaintiffs had failed to request that they be provided with the relevant maintenance

records in spite of the fact that they knew of their existence. We agree, for the reasons 

stated below, that none of defendants had a legal duty to obtain the Oak Island 

Accommodations maintenance records and to provide them to plaintiffs. We also 

conclude, however, that the existence of these records, coupled with the e-mails 

exchanged between Mr. Bell, Mr. Carroll, and Ms. Durham concerning waterintrusion problems at the house over the course of nearly a year prior to the closing,

provide additional support for our conclusion that the record discloses the existence 

of a genuine issue of material fact concerning the validity of plaintiffs’ fraud claims

given that awareness of the existence of these problems tends to undercut the 

accuracy of the representations contained in the disclosure statement concerning the 

condition of the house. 

¶ 56 We are not, obviously, holding that these facts compel a finding of liability or 

that a jury would not be able, depending upon its evaluation of the evidence, to return 

a verdict in favor of Berkeley Investors, Mr. Bell, Re/Max, and Mr. Carroll or that 

either sellers or real estate agents owe a fiduciary duty to buyers or to disclose defects 

that do not exist. Instead, we are simply holding that, in light of the present record, 
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a reasonable jury could, but was not required, to find in plaintiffs’ favor with respect 

to these fraud-related claims. As a result, for all of these reasons, we hold that the 

Court of Appeals correctly held that the trial court had erred by entering summary 

judgment in defendants’ favor with respect to the fraud claims that plaintiffs had 

asserted against Berkeley Investors, Mr. Bell, Re/Max, and Mr. Carroll.

F. Inference Running Backwards

¶ 57 Finally, Berkeley Investors and Mr. Bell argue that the Court of Appeals erred 

in reversing the trial court’s summary judgment order by violating the prohibition 

against relying upon inferences that “r[a]n backward.” In support of this argument, 

Berkeley Investors and Mr. Bell direct our attention to our decision in Childress v. 

Nordman, which they claim enunciates a “general rule that mere proof of the 

existence of a condition or state of facts at a given time does not raise an inference or 

presumption that the same condition or state of facts existed on a former occasion.”

238 N.C. 708, 712 (1953). In light of this principle, Berkeley Investors and Mr. Bell

argue that the Court of Appeals erred by relying upon Mr. Moore’s testimony, which

rested upon an inspection of the house that he conducted three months after the 

closing, given the absence of any “evidence before the Court of Appeals sufficient to 

show that [the] representations concerning the [h]ouse’s condition [made by Berkeley 

Investors and Mr. Bell] were false either when made by them or when acted on by 
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[plaintiffs]—despite [Mr.] Moore’s opinion . . . that the problems had been ‘going on 

for quite some time.’ ”

¶ 58 As Berkeley Investors and Mr. Bell have conceded, however, subsequent 

decisions of this Court and the Court of Appeals have held that the principle

articulated in Childress was “not of universal application” and that its application

was, instead, dependent upon the “facts and circumstances of the individual case, and 

on the likelihood of intervening circumstances as the true origin of the present 

existence or the existence at a given time,” Jenkins v. Hawthorne, 269 N.C. 672, 674–

75 (1967) (cleaned up) (holding that a reasonable jury could infer from evidence that 

the house at issue in that case was in the same condition at the time that the 

defendant made her allegedly false representations as it was when the problems were 

discovered several months later), with this Court having stated in Jenkins that “so 

much depends upon circumstances that it seems a mistake to think in terms of a ‘rule’ 

with respect to this or any other of the many factors that must be considered,” id. at 

675 (quoting Stansbury, N.C. Evidence § 90 (2d ed. 1963)), and with the Court of 

Appeals having described the Childress “rule” as being “riddled with exceptions” and

having stated that “[t]he trend is toward permitting the fact finder to consider the 

subsequent condition or fact along with all of the surrounding circumstances in 

arriving at its conclusion as to the existence of the condition or fact at the relevant 

time,” Plow v. Bug Man Exterminators, Inc., 57 N.C. App. 159, 162 (1982). A careful 
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examination of the record that is before us in the present case satisfies us that a 

reasonable jury could determine, based upon Mr. Moore’s testimony, that the damage

that he discovered had been in existence at the time of closing, particularly given the 

emphasis that Berkeley Investors and Mr. Bell have placed upon Mr. Cribb’s repair 

work and the absence of any evidence tending to show that any event that might have 

caused the damage that Mr. Moore observed had occurred between August and 

November 2014. As a result, we hold that the Court of Appeals did not violate any 

rule against “inferences running backwards” in partially reversing the trial court’s 

summary judgment order.

G. Breach of Fiduciary Duty

¶ 59 Finally, in addressing the validity of the Court of Appeals’ determination that 

the record disclosed the existence of genuine issues of material fact concerning the 

extent to which Rudd & Associates, Ms. Rudd-Gaglie, and Mr. Goodman breached a 

fiduciary duty to plaintiffs by (1) failing to procure the Oak Island Accommodations

maintenance records on behalf of plaintiffs and (2) hiring Mr. Williams to inspect the 

house given his failure to conduct intrusive moisture testing, we begin by noting that 

the relationship between a real estate agent and his or her client is by, definition, one 

of agency, with the agent owing a fiduciary duty to the buyer in all matters relating 

to the relevant transaction. See Restatement (Third) of Agency § 8.01 (2006). More 

specifically:
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A real estate agent has the fiduciary duty to exercise 

reasonable care, skill, and diligence in the transaction of 

business entrusted to him, and he will be responsible to his 

principal for any loss resulting from his negligence in 

failing to do so. The care and skill required is that 

generally possessed and exercised by persons engaged in 

the same business. This duty requires the agent to make 

a full and truthful disclosure to the principal of all facts 

known to him, or discoverable with reasonable diligence 

and likely to affect the principal. The principal has the 

right to rely on his agent’s statements, and is not required 

to make his own investigation.

Brown, 133 N.C. App. at 54–55 (cleaned up). In the same vein, the North Carolina 

Real Estate Manual, which is published by the North Carolina Real Estate 

Commission, notes that real estate agents have a duty to disclose any material facts 

known to the agent and to “discover and disclose to the principal all material facts 

about which the agent should reasonably have known.” N.C. Real Est. Manual 209

(Patrick K. Hetrick, Larry A. Outlaw & Patricia A. Moylan, eds., 2013) (emphasis 

omitted).

¶ 60 In arguing that they did not breach any fiduciary duty that they owed to 

plaintiffs, Rudd & Associates, Ms. Rudd-Gaglie, and Mr. Goodman claim that the

duties that they owed to plaintiffs were “define[d]” by the Exclusive Buyer Agency 

Agreement, which provided, in pertinent part, that Rudd & Associates, Ms. RuddGaglie, and Mr. Goodman had a duty to “disclos[e] to [plaintiffs] all material facts 

related to the property or concerning the transaction of which [they] ha[d] actual 

knowledge”; advised plaintiffs to “seek other professional advice in matters of . . . 
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surveying, wood-destroying insect infestation, structural soundness, engineering, 

and other matters”; and warned plaintiffs that, while Rudd & Associates, Ms. RuddGaglie, and Mr. Goodman “may provide [plaintiffs] the names of providers who claim 

to perform such services, [plaintiffs] understand[ ] that [Rudd & Associates, Ms. 

Rudd-Gaglie, and Mr. Goodman] cannot guarantee the quality of service or level of 

expertise of any such provider.” Finally, the agency agreement provided that 

plaintiffs would “indemnify and hold [Rudd & Associates, Ms. Rudd-Gaglie, and Mr. 

Goodman] harmless” from any claims or liability arising from plaintiffs’ selection of 

any such service provider or their decision not to have a particular service performed.

¶ 61 As the Court of Appeals correctly held, “a real-estate agent’s fiduciary duty is 

not prescribed by contract, but is instead imposed by operation of law.” Cummings, 

270, N.C. App. at 225. The fiduciary duty that a real estate agent owes to his or her 

principal arises from the agency relationship itself, Raleigh Real Est. & Tr. Co. v. 

Adams, 145 N.C. 161 (1907), with the duties that flow from that relationship being 

dependent upon the level of skill, knowledge, and professional practices in accordance 

with which real estate professionals generally operate rather than upon the nature 

of the contractual provisions governing any specific agent-principal relationship. See 

Restatement (Third) of Agency § 8.08 cmt. c (2006); see also Firemen’s Mut. Ins. Co. 

v. High Point Sprinkler Co., 266 N.C. 134, 142 (1966) (observing that, when a 

professional undertakes to represent a principal, he or she “implies that he [or she]
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possesses the degree of professional learning, skill and ability which others of that 

profession ordinarily possess, he [or she] will exercise reasonable care in the use of 

his [or her] skill and application of his [or her] knowledge to the assignment 

undertaken, and will exercise his [or her] best judgment in the performance of the 

undertaking”). Rudd & Associates, Ms. Rudd-Gagle, and Mr. Goodman have failed 

to cite any authority for the proposition that a real estate agent may limit or “define”

his or her fiduciary duties by contract, and we know of none. As a result, we decline 

to hold that the extent of the duties that Rudd & Associates, Ms. Rudd-Gaglie, and 

Mr. Goodman owed to plaintiffs in connection with the transaction that is at issue in 

this case hinged upon the language of the agency agreement rather than upon general 

principles of North Carolina agency law.

6

¶ 62 As we have already noted, the relevant Real Estate Commission guidelines 

indicate that a real estate agent is obligated to “discover and disclose” those material 

facts that “may affect [plaintiffs’] rights and interests or influence [plaintiffs’] decision 

in the transaction” rather than to simply disclose those of which the agent has “actual 

knowledge.” N.C. Real Est. Manual 209, 211. In view of the fact that plaintiffs do 

not contend that Rudd & Associates, Ms. Rudd-Gaglie, or Mr. Goodman had actual 

 

6 Although Rudd & Associates, Ms. Rudd-Gaglie, and Mr. Goodman contend that, 

rather than “restrict[ing] or limit[ing their] fiduciary duty,” the Exclusive Buyer Agency 

Agreement simply “defines that duty,” this distinction strikes us as without legal effect to the 

extent that it defines the duties that Rudd & Associates, Ms. Rudd-Gaglie, and Mr. Goodman 

owed to plaintiffs as something less than what would otherwise be required by law.
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knowledge of the water-intrusion problems that existed at the house, the relevant 

issue with respect to plaintiffs’ breach of fiduciary duty claim against Rudd & 

Associates, Ms. Rudd-Gaglie, and Mr. Goodman is whether the record discloses the 

existence of a genuine issue concerning the extent to which Rudd & Associates, Ms. 

Rudd-Gaglie, and Mr. Goodman exercised a level of diligence consistent with 

applicable professional standards. See Brown, 133 N.C. App. at 54.

¶ 63 In attempting to persuade this Court that the record does not contain any 

evidence tending to suggest that they failed to meet the applicable standard, Rudd & 

Associates, Ms. Rudd-Gaglie, and Mr. Goodman begin by arguing that plaintiffs failed 

to adduce evidence tending to show that they had an affirmative duty to obtain the

relevant Oak Island Accommodations maintenance records or that it was “customary 

or necessary” for them to do so. In support of this argument, Rudd & Associates, Ms. 

Rudd-Gaglie, and Mr. Goodman point out that, unlike the situation at issue in Brown, 

in which a specific Real Estate Commission guideline required the agent to make his 

or her own measurement of the square footage of the property rather than relying 

upon the measurements provided by an appraiser, no guideline requires an agent to 

procure prior maintenance records in the event that the house in question had 

previously been used as a rental property. In addition, Rudd & Associates, Ms. RuddGaglie, and Mr. Goodman emphasize that Ms. Rudd-Gaglie obtained all of the 
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information that plaintiffs requested, with plaintiffs having failed to ask them to

obtain the relevant maintenance records.

¶ 64 In rejecting these arguments, the Court of Appeals concluded that, since Rudd 

& Associates, Ms. Rudd-Gaglie, and Mr. Goodman had failed to cite any authority for 

the proposition that “a real-estate agent’s duty to investigate and disclose is limited, 

as a matter of law, by the [ ] Real Estate Commission [or] the requests made by the 

agent’s client,” Cummings, 270 N.C. App. at 226, the record disclosed the existence of 

a genuine issue of material fact concerning the extent to which Rudd & Associates, 

Ms. Rudd-Gaglie, and Mr. Goodman had a duty to obtain the Oak Island 

Accommodations maintenance records and provide them to plaintiffs. In our view, 

however, the question that the Court of Appeals should have addressed is whether

the Oak Island Accommodations maintenance records encompassed material 

information and, if so, whether Rudd & Associates, Ms. Rudd-Gaglie, and Mr. 

Goodman had an independent duty to request these records in their exercise of 

“reasonable diligence.” Brown, 133 N.C. App. at 55.

¶ 65 The only evidence that plaintiffs cite in support of their contention that Rudd 

& Associates, Ms. Rudd-Gaglie, and Mr. Goodman had an independent duty to obtain 

the relevant maintenance records is the deposition testimony of Walter LaRoque, a 

real estate agent who served as an expert witness for Rudd & Associates, Ms. RuddGaglie, and Mr. Goodman. Although Mr. LaRoque acknowledged that the extent to 
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which particular facts are material can be buyer-specific and that Ms. Rudd-Gaglie

had an obligation to conduct an independent investigation into the condition of the 

property, he never stated that the Oak Island Accommodations maintenance records 

constituted material information for purposes of this transaction or that Ms. RuddGaglie had an independent duty to request them. On the contrary, while it is clear 

from an analysis of his deposition testimony that Mr. LaRoque believed that the cost

of maintaining the house would be a material fact given the impact that such 

information would have had upon the viability of the house as rental property, he did 

not, as best we can ascertain, testify that Ms. Rudd-Gaglie had an affirmative 

obligation to make an independent request for the relevant maintenance records

themselves. In the absence of such evidence, we hold that the record does not reveal 

the existence of a disputed issue of material fact with respect to this issue and that 

Rudd & Associates, Ms. Rudd-Gaglie, and Mr. Goodman are entitled to judgment as 

a matter of law with respect to the issue of whether they breached their fiduciary 

duty to plaintiffs by failing to obtain the relevant Oak Island Accommodations 

maintenance records.

¶ 66 Secondly, Rudd & Associates, Ms. Rudd-Gaglie, and Mr. Goodman contend 

that they fulfilled their fiduciary duty to plaintiffs by recommending that Mr. 

Williams, who was a licensed home inspector, inspect the house and emphasize that, 

despite plaintiffs’ contention before the Court of Appeals that the performance of
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moisture testing was a “usual and customary” component of a home inspection, Mr. 

Williams had testified that he only performed intrusive moisture testing when he 

concluded that it was necessary to do so and that they reasonably relied upon his 

determination that there was no need for him to conduct such testing in this case.7 

In addition, Rudd & Associates, Ms. Rudd-Gaglie, and Mr. Goodman point to Mr. 

Moore’s testimony that there was no reason for Mr. Williams to have performed such 

moisture testing given the absence of readily apparent water damage.

¶ 67 In rejecting this aspect of the position espoused by Rudd & Associates, Ms. 

Rudd-Gaglie, and Mr. Goodman, the Court of Appeals pointed to Mr. Moore’s 

testimony that he would have identified the water-intrusion problem has he inspected 

the property and the lack of clarity concerning the extent to which the performance 

of a moisture test was a “usual and customary” component of a home inspection before 

stating that it was “unable to conclude that [Mr.] Williams’ failure to conduct such a 

test was unobjectionable.” Cummings, 270 N.C. App. at 226–27. However, the 

undisputed record evidence tends to show that Rudd & Associates, Ms. Rudd-Gaglie, 

and Mr. Goodman recommended Mr. Williams on the basis of his expertise in 

detecting moisture-related problems, that neither Ms. Rudd-Gaglie nor Mr. Goodman 

were licensed home inspectors or general contractors and did not know what the 

 

7 Although plaintiffs emphasize the results of Mr. Williams’ inspection in the factual 

statements set out in their brief, they do not mention it in discussing their breach of fiduciary 

duty claim against Rudd & Associates, Ms. Rudd-Gaglie, and Mr. Goodman.
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components of a proper home inspection would be, and that, at the time of his 

employment, Mr. Williams was a licensed home inspector, general contractor, and 

insurance adjuster who had never been subject to any sort of professional discipline.

In addition, Mr. Moore corroborated Mr. Williams’ contention that there was no

reason, based upon what he had seen while inspecting the house, for the performance 

of additional moisture testing given that the water damage that the house had 

sustained was not readily apparent in light of the cosmetic repairs that had been 

made. As a result of the fact that plaintiffs did not successfully impeach Mr. Williams’

qualifications or demonstrate that Rudd & Associates, Ms. Rudd-Gaglie, or Mr. 

Goodman had any reason to conclude that Mr. Williams had failed to act in an 

appropriate manner, the record contains no basis for concluding that Rudd & 

Associates, Ms. Rudd-Gaglie, or Mr. Goodman failed to exercise “reasonable 

diligence” in recommending that plaintiffs employ Mr. Williams or in relying upon 

his expertise.8 See Clouse, 115 N.C. App. at 509 (holding that a real estate agent 

reasonably relied upon the expert opinion of an independent surveyor). As a result, 

we hold that the Court of Appeals erred by reversing the trial court’s decision to grant 

 

8 Although plaintiffs have argued that the performance of a moisture test was “usual 

and customary” and that Mr. Williams had failed to perform such a test, it seems to us that 

such an argument tends to support a claim against Mr. Williams relating to the manner in 

which he conducted his inspection rather than a claim for breach of fiduciary duty against 

Rudd & Associates, Ms. Rudd-Gaglie, and Mr. Goodman.
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summary judgment in favor of Rudd & Associates, Ms. Rudd-Gaglie, and Mr. 

Goodman with respect to this issue.

III. Conclusion

¶ 68 Thus, for the reasons set forth above, we hold that the Court of Appeals 

correctly determined that the trial court had erred by granting summary judgment

in defendants’ favor with respect to plaintiffs’ claims for negligence and fraud against

Re/Max and Mr. Carroll and for negligent misrepresentation and fraud against

Berkeley Investors and Mr. Bell and that the Court of Appeals erred by reversing the 

trial court’s decision to grant summary judgment in favor of Rudd & Associates, Ms. 

Rudd-Gaglie, and Mr. Goodman. As a result, the Court of Appeals’ decision is 

affirmed, in part, and reversed, in part, with this case being remanded to the Court 

of Appeals for further remand to Superior Court, Brunswick County, for a trial on the 

merits with respect to plaintiffs’ remaining claims against Berkeley Investors, Mr. 

Bell, Re/Max, and Mr. Carroll and for the dismissal of the entirety of their claims 

against Rudd & Associates, Ms. Rudd-Gaglie, and Mr. Goodman.

AFFIRMED, IN PART; REVERSED, IN PART; AND REMANDED.
Justice BERGER concurring in part and dissenting in part.

¶ 69 I concur with the portion of the majority opinion that reverses the Court of 

Appeals’ decision regarding plaintiffs’ agents and claims of negligent 

misrepresentation and fraud against the sellers. For the reasons below, however, I 

respectfully dissent from the majority opinion addressing the claims of negligence 

and fraud against the sellers’ agents.

¶ 70 Summary judgment is appropriate when “there is no genuine issue as to any 

material fact and . . . any party is entitled to a judgment as a matter of law.” Dallaire 

v. Bank of Am., N.A., 367 N.C. 363, 367 (2014). To be a “genuine issue” for purposes 

of summary judgment, an issue must be “maintained by substantial evidence.” 

Kessing v. Nat’l Mortg. Corp., 278 N.C. 523, 534 (1971). 

¶ 71 The duties owed by real estate agents are well settled in this state. 

A real estate agent has the fiduciary duty to exercise 

reasonable care, skill, and diligence in the transaction of 

business entrusted to him, and he will be responsible to his 

principal for any loss resulting from his negligence in 

failing to do so. The care and skill required is that generally 

possessed and exercised by persons engaged in the same 

business. This duty requires the agent to make a full and 

truthful disclosure to the principal of all facts known to 

him, or discoverable with reasonable diligence and likely to 

affect the principal.

Brown v. Roth, 133 N.C. App. 52, 54–55 (1999) (cleaned up) (emphasis added). 

¶ 72 In addition to the fiduciary duties owed by agents to their principals, real 
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estate agents also owe duties to third parties. Specifically, “[a] broker has a duty not 

to conceal from the purchasers any material facts and to make full and open 

disclosure of all such information.” Johnson v. Beverly-Hanks & Assocs., Inc., 328 

N.C. 202, 210 (1991) (citing Spence v. Spaulding & Perkins, Ltd., 82 N.C. App. 665 

(1986)). This duty arises from N.C.G.S. § 93A-6(a), which states that the North 

Carolina Real Estate Commission (the Commission) has the authority to discipline a 

broker for “[m]aking any willful or negligent misrepresentation or any willful or 

negligent omission of material fact.” N.C.G.S. § 93A-6(a) (2019). “Material fact” is 

defined in the Commission’s Student Manual generally as “[a]ny fact that could affect 

a reasonable person’s decision to buy, sell, or lease” the property in question. 2019–

2020 General Update Course, Student Manual 28 (N.C. Real Est. Comm’n, 2019), 

https://www.superiorschoolnc.com/wp-content/uploads/2020/03/2019-20-GeneralUpdate-version-9.2019.pdf. More specifically, when the fact in question involves the 

condition of the property itself, as in the present case, the manual describes a 

material fact as follows: “significant property defects or abnormalities such as[ ] 

structural defect(s), malfunctioning system(s), [a] leaking roof, or drainage or flooding 

problem(s).” Id. Where a defective condition is repaired, the prior defect need not be 

disclosed because the condition is no longer “material.” 

¶ 73 Here, the majority agrees with plaintiffs’ contention that (1) the adequacy of 

Cribb’s qualifications and (2) the equivocal nature of his statements to Carroll that 
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he “may have found the leak” and that he “hope[d] that was it” raise an issue of 

material fact as to whether Carroll’s belief that the leak had been fixed was 

reasonable. Cribb’s qualifications, however, have no bearing on the present analysis. 

Rather, Carroll’s reasonable conclusion that the leak had been fixed was bolstered by 

the result of plaintiffs’ inspection. That inspection, which was conducted by a licensed 

contractor just three days after it had rained, revealed no evidence of an ongoing leak.

¶ 74 At some time prior to March 24, 2014, Cribb completed several repairs to the 

exterior of the home in an effort to fix a leak that had stained the ceiling. On July 

12, 2014, plaintiffs made an offer to purchase the subject property. Nearly four 

months after Cribb’s repairs, plaintiffs commissioned a property inspection to be 

conducted by a licensed home inspector on July 19, 2014. Despite the rain that 

occurred three days before the inspection, the inspector found no evidence of an 

ongoing leak where the stain had previously been. Carroll was present during the 

inspection and received a copy of the report. It was not until after a major 

thunderstorm in November 2014 that further evidence of water intrusion emerged. 

The relevant record evidence, viewed in the light most favorable to plaintiffs, thus 

demonstrates that Carroll hired a handyman to repair a leak, the handyman 

conducted repairs, and four months later, a licensed home inspector found no 

evidence of an existing leak even after it had recently rained. 

¶ 75 Under these circumstances alone, it was reasonable for Carroll to believe that 
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the leak had been remedied. As such, the fact that there had previously been a leak 

was no longer “material.” See 2019–2020 General Update Course, Student Manual 

28 (N.C. Real Est. Comm’n, 2019). Carroll was thus under no duty to disclose this 

information to plaintiffs. Since plaintiffs have failed to forecast sufficient evidence to 

show that the sellers’ agents owed a duty, plaintiffs cannot prevail on their negligence 

claim. For similar reasons, I would also conclude that the sellers’ agents did not 

commit fraud. 

¶ 76 Moreover, the majority expands the duty a seller’s agent owes a purchaser to 

the functional equivalent of a fiduciary duty. The obligations seller’s agents owe to 

purchasers are fairly well established. At least they were. The majority opinion 

seems to suggest a seller’s real estate broker is now a guarantor of the condition of

the subject property and faces potential liability for failure to disclose any potential 

deficiency mentioned by the seller. Inevitably, the expansion of this duty will lead to

uncertainty as to the responsibilities of seller’s agent to the seller vis à vis this new 

duty to the buyer.

Chief Justice NEWBY joins in this opinion.