PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

No. 15-2104

DREAMSTREET INVESTMENTS, INC., d/b/a DS Builders, a North 

Carolina Corporation,

Plaintiff - Appellant,

v.

MIDCOUNTRY BANK, a Federal Savings Bank,

Defendant - Appellee.

Appeal from the United States District Court for the Middle 

District of North Carolina, at Greensboro. Catherine C. Eagles, 

District Judge. (1:14-cv-00521-CCE-JEP)

Argued: October 25, 2016 Decided: November 30, 2016 

Before WILKINSON, KING, and HARRIS, Circuit Judges.

Affirmed by published opinion. Judge Harris wrote the opinion, 

in which Judge Wilkinson and Judge King joined.

ARGUED: Rachel Marie Stevens, DREAMSTREET INVESTMENTS, INC., 

Raleigh, North Carolina, for Appellant. Robert Eli Levin, 

HAYWOOD, DENNY & MILLER, L.L.P., Durham, North Carolina, for 

Appellee. ON BRIEF: Matthew Ivan Van Horn, LAW OFFICE OF 

MATTHEW I. VAN HORN, PLLC, Raleigh, North Carolina, for 

Appellant. 
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PAMELA HARRIS, Circuit Judge:

This case arises from a “seller holdback” agreement between 

Dreamstreet Investments, Inc., which was selling a vacant lot 

for home construction, and MidCountry Bank, which was financing 

the lot’s purchase by a third party. Under the agreement, part 

of the purchase price owed to Dreamstreet instead would be 

retained by MidCountry, pending completion of the home and 

subject to certain conditions.

On June 16, 2009, Dreamstreet contacted MidCountry, 

challenging the propriety of the seller holdback agreement and 

threatening to sue. Over four years later, Dreamstreet made 

good on its threat. In a complaint filed on June 28, 2013, 

Dreamstreet alleged that MidCountry fraudulently induced it to 

enter into the seller holdback agreement, in violation of North 

Carolina’s Unfair and Deceptive Trade Practices Act (“UDTPA”). 

A subsequent amendment added a claim under the common-law 

doctrine of constructive fraud.

The district court granted summary judgment to MidCountry. 

Dreamstreet’s UDTPA claim, the court held, was barred by the 

applicable four-year statute of limitations. And on the 

undisputed record facts, the court concluded, Dreamstreet could 

not establish the necessary elements of a constructive fraud 

claim. We agree, and for the reasons given below, we affirm the 

district court’s decision. 
3

I.

A.

At issue in this case is an agreement between two 

commercial entities: Dreamstreet, a real estate investment 

corporation; and MidCountry, a bank. The terms of that 

agreement are not contested. What is disputed is how the 

agreement came to be, and whether MidCountry has lived up to its 

obligations to Dreamstreet.1

The case began when Jason Pittman, through his company 

Dreamstreet Investments, entered into a purchasing agreement to 

sell an unimproved lot to Carl Ingraham for $115,000. Ingraham 

hoped to build a home on the property, and to fund his purchase, 

he applied for an owner-builder loan from MidCountry. An ownerbuilder loan would allow Ingraham to borrow the purchase price 

of the lot, and then, acting as his own general contractor, to 

make additional draws on the remaining loan amount to fund the 

construction of his home.

Under MidCountry’s underwriting standards, Ingraham was 

required to make a down-payment of approximately $43,000 to 

qualify for the loan. But Ingraham was unable to meet this 

 1 On review of a grant of summary judgment to MidCountry, we 

view the facts in the light most favorable to Dreamstreet, as 

the non-moving party. See Henry v. Purnell, 652 F.3d 524, 531

(4th Cir. 2011) (en banc). 
4

requirement, and so Dreamstreet and MidCountry entered into the 

seller holdback agreement (the “Agreement”) at issue here. 

Under the Agreement, Dreamstreet would forgo immediate receipt 

of $43,200 of the purchase price of the lot. That money instead 

would be retained by MidCountry, ensuring – according to 

MidCountry – that there would be sufficient funds to complete 

construction of Ingraham’s home. Upon completion of the home, 

the money would be released to Dreamstreet.

Additional conditions of the Agreement were memorialized in 

an email sent and signed by Pittman on June 12, 2008, which the 

parties agree establishes the terms of their agreement. Under 

those terms, the $43,200 would not be disbursed to Dreamstreet 

if Ingraham defaulted on his MidCountry loan or failed to 

complete construction on his home. Specifically, the email 

stated: “I [Dreamstreet] understand that the only reason the 

holdback would not be available was if [Ingraham] was in default 

or unable to complete construction on the home and at that point 

MidCountry would use those remaining funds to complete 

construction on the home.” J.A. 80.

After sending the June 12 email, Pittman contacted his 

attorney, his banker, and a real estate appraiser to discuss the 

seller holdback agreement because it did not “sound right” to 

him. J.A. 195. Pittman concluded that he would complete the 

transaction and sell the Dreamstreet lot to Ingraham only if 
5

Ingraham provided him with a promissory note to cover the 

holdback, secured by a deed of trust on the property. On June 

19, 2008, Ingraham and Dreamstreet executed a promissory note 

for $49,450, secured by a deed of trust, and closed on the sale 

of the lot.

A year later, shortly before the promissory note was due 

and after several unsuccessful attempts to contact MidCountry, 

Dreamstreet sent a lengthy email to MidCountry demanding 

immediate return of what it now viewed as the improper $43,200 

holdback. According to the June 16, 2009 email, Pittman had 

consulted with his attorney, and it was their view that the 

holdback actually had “nothing to d[o]” with ensuring the 

availability of funds for Ingraham’s construction project, and 

“never should have been held back in the first place.” J.A. 86. 

Pittman promised to report MidCountry to the North Carolina 

Banking Commission and also to file a lawsuit against 

MidCountry: “[I] have already paid my attorney $1,000 to 

initiate this process,” and “[w]e will be sending out complaints 

via certified mail on the 26th.” Id.

For over four years, Dreamstreet failed to follow through 

on its threat. During that time, Ingraham defaulted on his loan 

with MidCountry. On February 25, 2010, MidCountry notified 

Ingraham that his mortgage loan had come due on September 19, 

2009; that his failure to make payments on the loan in December 
6

2009 and January and February 2010 had put him in default; and 

that MidCountry intended to commence foreclosure proceedings. 

At around the same time, on December 10, 2009, the county 

inspection department certified the construction on Ingraham’s 

land as compliant with building and zoning regulations.2 And on 

March 30, 2012, MidCountry foreclosed on Ingraham’s home. 

Although Dreamstreet’s promissory note against Ingraham was 

secured by a deed of trust on the property, it appears that 

Dreamstreet did not assert any security interest in connection 

with the foreclosure.

B.

Dreamstreet finally filed the promised suit against 

MidCountry on June 28, 2013.3 Alleging that MidCountry 

fraudulently induced it to enter into the Agreement and never 

intended to release the $43,200 holdback, Dreamstreet raised 

claims under North Carolinaʹs Unfair and Deceptive Trade 

 2 Whether the Certificate of Compliance received by Ingraham 

demonstrated completion of Ingraham’s home for purposes of the 

Agreement is disputed by the parties. We may assume for 

purposes of this appeal that the home was completed on December 

10, 2009.

3 Dreamstreet originally filed suit in North Carolina state 

court against Carl Ingraham and his wife, as well as MidCountry. 

After Dreamstreet voluntarily dismissed the Ingrahams as 

defendants, MidCountry removed the action to federal district 

court, invoking diversity jurisdiction. See 28 U.S.C. § 1332.
7

Practices Act and for common-law constructive fraud. MidCountry 

moved for summary judgment. Dreamstreet’s UDTPA claim, it 

asserted, was barred by the applicable four-year statute of 

limitations. And the constructive fraud claim failed, 

MidCountry argued, because as a matter of law, Dreamstreet could 

not show the required element of a fiduciary relationship 

between the parties.

The district court granted MidCountry’s motion for summary 

judgment in an oral ruling. It agreed with MidCountry that the 

four-year statute of limitations barred the UDTPA claim. On the 

constructive fraud claim, the district court assumed without 

deciding that there was a fiduciary relationship between 

MidCountry and Dreamstreet. But because Ingraham defaulted on 

his loan, the court concluded, the Agreement’s conditions on 

release of the holdback were not satisfied, and thus MidCountry 

did not breach any fiduciary duty it may have owed to 

Dreamstreet. Dreamstreet timely appealed.

II.

We review de novo the district court’s grant of summary 

judgment. Durham v. Horner, 690 F.3d 183, 188 (4th Cir. 2012). 

Summary judgment is appropriate only if no material facts are 

disputed and the moving party is entitled to judgment as a 
8

matter of law. Henry v. Purnell, 652 F.3d 524, 531 (4th Cir. 

2011) (en banc). 

A.

Dreamstreet’s first contention on appeal is that the 

district court erred in holding that its UDTPA claim is timebarred. Under North Carolina law, UDTPA claims are governed by 

a four-year statute of limitations, and that limitations period 

begins to run when an alleged violation occurs. See N.C. Gen. 

Stat. § 75-16.2 (setting out limitations period); Hinson v. 

United Fin. Servs., Inc., 473 S.E.2d 382, 386–87 (N.C. Ct. App. 

1996) (applying UDTPA limitations period). And when, as in this 

case, a UDTPA claim is based on alleged fraudulent conduct, then 

the violation occurs – and the limitations clock starts running 

– “at the time that the fraud is discovered or should have been 

discovered with the exercise of reasonable diligence.” Rothmans 

Tobacco Co., Ltd. v. Liggett Grp., Inc., 770 F.2d 1246, 1249

(4th Cir. 1985) (citing Wilson v. Crab Orchard Dev. Co., 171 

S.E.2d 873, 884 (N.C. 1970)). 

The parties do not dispute this governing framework.4 

Instead, they disagree as to whether Dreamstreet discovered or 

 4 Dreamstreet does suggest that it is “perhaps more 

appropriate” to analogize its action to one for breach of 

contract, in which case the limitations period would begin to 

run at the time of the breach. Appellant Br. at 22; see Ring 

Drug Co. v. Carolina Medicorp Enters., Inc., 385 S.E.2d 801, 804 

(Continued)
9

should have discovered the fraud of which it complains more than 

four years before it filed suit on June 28, 2013. According to 

Dreamstreet, the earliest date on which it could have discovered 

or been expected to discover MidCountry’s alleged fraud was 

December 10, 2009 – within the four-year limitations period –

when Ingraham received the certificate of compliance on his 

home. It was not until then, Dreamstreet argues, that 

MidCountry was required to make good on the Agreement by 

releasing the holdback to Dreamstreet, and thus not until then 

that Dreamstreet could have known that MidCountry did not intend 

to honor the Agreement. 

What that position fails to account for is the undisputed 

fact that on June 16, 2009 – approximately two weeks outside the 

four-year limitations period – Dreamstreet itself announced that 

it planned to sue MidCountry on the same theory it advances in 

this litigation: that the seller holdback was a sham. In its 

June 16 email, Dreamstreet explained that the extensive 

 

(N.C. Ct. App. 1989) overruled on other grounds by Crossman v. 

Moore, 459 S.E.2d 715 (N.C. 1995). Like the district court, we 

disagree. In both its complaint and its brief before this 

court, Dreamstreet makes clear that its claim “is based on 

deceptive statements made by MidCountry” in order to induce 

Dreamstreet to enter into a “sham seller holdback scheme.” 

Appellant Br. at 22; see also J.A. 437 (district court 

explaining that “all the conduct the plaintiff is contending 

constitutes the [UDTPA violation] occurred back in 2008, in the 

inducement to enter into” the Agreement). 
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documents it had shared with its attorney – “all emails from 

[MidCountry] during the initial closing, along with my note, 

deed of trust, and a budget spreadsheet from [MidCountry] 

regarding Carl Ingraham’s house budget” – were enough to 

convince both Dreamstreet and its counsel that the holdback 

funds were not intended for Ingraham’s construction budget and 

“never should have been held back in the first place.” J.A. 86. 

By June 16, 2009, in other words, Dreamstreet and its 

attorney were privy to information that led it to accuse 

MidCountry of fraud and threaten to “get a judge . . . to force 

the release of those funds.” Id. Dreamstreet cannot now claim 

that it lacked “capacity and opportunity to discover” that 

fraud, Grubb Props., Inc. v. Simms Inv. Co., 400 S.E.2d 85, 88 

(N.C. Ct. App. 1991), until six months later, when Ingraham 

received a certificate of compliance. The limitations period on 

Dreamstreet’s UDTPA claim began running by June 16, 2009, see,

e.g., Newton v. Barth, 788 S.E.2d 653, 662 (N.C. Ct. App. 2016) 

(UDTPA claim triggered when party discovers or should discover 

facts constituting alleged fraud), more than four years before 

Dreamstreet filed suit. With respect to the UDTPA claim, the 

district court properly granted summary judgment to MidCountry 

on statute of limitation grounds.
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B.

We turn next to Dreamstreet’s constructive fraud claim, on 

which the district court also granted summary judgment to 

MidCountry. Under North Carolina law, the key to a constructive 

fraud claim is a fiduciary relationship between plaintiff and 

defendant. It is that relationship of “special confidence” that 

gives rise to a special duty to “act in good faith and with due 

regard to the interests of the one reposing confidence.” Branch 

Banking & Trust Co. v. Thompson, 418 S.E.2d 694, 699 (N.C. Ct. 

App. 1992) (internal quotation marks and citation omitted). 

When such a fiduciary relationship exists – and only when it 

exists – a plaintiff need not bear the “exacting” burden of 

proving actual fraud, but may instead rely on a presumption of 

constructive fraud that arises under equity “when the superior 

party obtains a possible benefit.” Cash v. State Farm Mut. 

Auto. Ins. Co., 528 S.E.2d 372, 380 (N.C. Ct. App. 2000); see 

also White v. Consol. Planning, Inc., 603 S.E.2d 147, 156 (N.C. 

Ct. App. 2004) (constructive fraud plaintiff need not prove 

intent to deceive). 

MidCountry argues that Dreamstreet cannot show such a 

relationship in this case, and we agree. Under North Carolina 

law, fiduciary relationships are characterized by “confidence 

reposed on one side, and resulting domination and influence on 

the other.” Dallaire v. Bank of America, N.A., 760 S.E.2d 263, 
12

266 (N.C. 2014) (internal quotation marks and citation omitted). 

Lawyers and their clients, for instance, or trustees and their 

beneficiaries, share such relationships, with a “heightened 

level of trust” matched with a corresponding duty to “maintain 

complete loyalty.” Id. By contrast, parties to a contract –

like the Agreement between MidCountry and Dreamstreet –

generally do not become each other’s fiduciaries; what they owe 

each other is defined by the terms of their contracts, with no 

special duty of loyalty. Branch Banking, 418 S.E.2d at 699; see

also Dallaire, 760 S.E.2d at 267 (borrowers and lenders, unlike 

fiduciaries, “are generally bound only by the terms of their 

contract and the Uniform Commercial Code”). As a matter of law, 

there can be no fiduciary relationship between “parties in equal 

bargaining positions dealing at arm’s length, even though they 

are mutually interdependent businesses.” Strickland v. 

Lawrence, 627 S.E.2d 301, 306 (N.C. Ct. App. 2006).

On the record in this case, it is clear that the 

relationship between MidCountry and Dreamstreet was no more than 

the standard one between two commercial entities negotiating a 

contract at arm’s length. There is nothing to suggest that 

Dreamstreet “reposed any sort of special confidence,” Branch 

Banking, 418 S.E.2d at 699, in MidCountry; on the contrary, 

skeptical of MidCountry’s proposal, Pittman consulted with an 

attorney, a banker, and a real estate appraiser about the 
13

holdback before closing on the sale of the lot. Such

consultation with outside experts, North Carolina courts have 

held, is inconsistent with a claim of fiduciary relationship or 

constructive fraud. See id. (no fiduciary relationship where 

complaining party consulted with banker and accountant before 

entering into agreement); see also Sullivan v. Mebane Packaging 

Grp., Inc., 581 S.E.2d 452, 462 (N.C. Ct. App. 2003) (evidence 

that complaining party obtained outside counsel rebuts 

presumption of constructive fraud). 

Nor is there any indication that Dreamstreet was in the 

kind of unequal bargaining position that might qualify as an 

indication of a fiduciary relationship under North Carolina law. 

Dreamstreet emphasizes that it was MidCountry that devised the 

holdback arrangement and then proposed it to Dreamstreet. But 

the fact that one party proposes or advocates for a transaction 

is not enough to establish unequal bargaining power and a 

fiduciary relationship. North Carolina law makes clear, for 

instance, that borrowers ordinarily do not enjoy a fiduciary 

relationship or the protection of a special duty of loyalty when 

it comes to their lenders, even when those lenders encourage 

them to borrow. See Dallaire, 760 S.E.2d at 266-67 (assurances 

by bank lender regarding mortgage loan do not turn ordinary 

debtor-creditor relationship into fiduciary relationship); 

Branch Banking, 418 S.E.2d at 699 (reliance on representations 
14

of creditor does not turn debtor-creditor relationship into 

fiduciary relationship). Dreamstreet was in a position to 

consult with an attorney before agreeing to MidCountry’s terms. 

If Dreamstreet had concerns, then it could have declined the 

holdback proposal and forgone the sale of its lot – or it could 

take steps to protect itself, as it did, by insisting on a 

promissory note with Ingraham, secured by a deed of trust. 

We do not doubt, as Dreamstreet argues, that a fiduciary 

relationship does not depend in every case on the existence of a 

formal legal relationship like that between attorney and client 

or trustee and beneficiary. See Bumgarner v. Tomblin, 306 

S.E.2d 178, 183 (N.C. Ct. App. 1983) (finding issue of fact as 

to fiduciary relationship where plaintiffs had long-term and 

regular dealings with defendant with special legal skills and 

real estate expertise). But it is clear that more is required 

than a “mutually interdependent” business relationship between 

two parties to a commercial contract. Strickland, 627 S.E.2d at 

306; see Branch Banking, 418 S.E.2d at 699. The undisputed 

facts of this case reveal an ordinary contractual relationship, 

with nothing that could give rise to a special fiduciary 

relationship. And because the existence of a fiduciary 

relationship is a necessary element of constructive fraud, the 
15

district court properly granted summary judgment to MidCountry 

on this claim, as well.5

III.

For the foregoing reasons, we affirm the judgment of the 

district court. 

AFFIRMED

 5 As noted above, the district court assumed the existence 

of a fiduciary relationship for purposes of its decision, and 

granted summary judgment on the ground that Dreamstreet could 

show no breach of any fiduciary duty it was owed. See Governors 

Club, Inc. v. Governors Club Ltd. P’ship, 567 S.E.2d 781, 787–88 

(N.C. Ct. App. 2002) (constructive fraud plaintiff must show 

existence of fiduciary duty and breach of that duty). Because 

we hold that Dreamstreet cannot show the necessary fiduciary 

relationship as a matter of law, we need not address the 

district court’s alternative holding.