JORDAN v. BRADSHER (2016)

Appeal by plaintiff from Order entered 2 March 2015 by Judge Debra S. Sasser in Wake County District Court. Heard in the Court of Appeals 13 April 2016. Wake County, No. 14 CVD 5121.

Mary Jordan (plaintiff) appeals from the 2 March 2015 Order dismissing with prejudice all of her claims. After careful review, we reverse and remand.

I. Background

Plaintiff filed a pro se complaint in Wake County District Court (the first lawsuit) on 22 April 2014 against her brother, Stoney Bradsher (defendant). Plaintiff stated the following in the complaint: Plaintiff purchased a house located at 4000 Vesta Drive in Raleigh on 20 October 2005. In February 2008, defendant “agreed to refinance the property in his name since he was able to receive financing for the loan at a much lower rate than what [plaintiff] had previously obtained to secure the property.” Defendant paid no consideration for the property, and “unbeknownst to [plaintiff], she transferred the deed solely into [defendant's] name.” “[T]he parties' intent was to transfer the property back to [plaintiff] once she was able to secure a loan on the property with a good interest rate.” Defendant “refuses to return the property,” entered into a contract to sell the house to a real estate company, and “breached his contract with [plaintiff].” The record reveals that the parties entered into an “Offer to Purchase and Contract” in January 2014, with plaintiff listed as the buyer and defendant as the seller, and that plaintiff received her loan estimate in March 2014.

In plaintiff's first claim, she asked the court to set aside the deed because she executed it under a mistaken belief. Second, plaintiff asked the court to impose a “constructive, resulting, and/or equitable trust on the property pursuant to which [defendant] is adjudged to hold the property for the sole benefit of [plaintiff] .” Third, plaintiff alleged money damages, claiming that defendant “has been unjustly enriched by obtaining the property without paying consideration to [plaintiff] in excess of $25,000.”

On 23 June 2014, plaintiff filed a small claims action and “complaint for money owed” (the second lawsuit). Plaintiff alleged the following damages: “cost of deed filing lawsuit, lost of income [sic], damage to property, light bill, water bill, false arrest, removed my tenant unlawfully, grassing cutting locks [sic].” On 24 July 2014, a magistrate dismissed the second lawsuit with prejudice, and plaintiff appealed the judgment to district court. It was selected for arbitration, and a hearing was held 22 October 2014. The arbitrator concluded that plaintiff shall be awarded nothing from defendant.

On 27 October 2014, the Wake County District Court entered an order concluding that the first and second lawsuits involve common questions of law and/or fact and consolidated the actions for hearing and trial, “in the event that either party requests trial de novo in the second action,” noting that the time for appeal had not yet expired. The trial court ordered that each action shall remain a separate action. Plaintiff did not request a trial de novo in her second lawsuit. On 4 December 2014, defendant filed an answer to plaintiff's first lawsuit, asserting as an affirmative defense that the complaint failed to state a claim upon which relief could be granted. Defendant filed an amended answer on 9 December 2014.

The matter was set for trial on 15 December 2014 in Wake County District Court. Prior to the start of the trial, defendant orally moved to dismiss plaintiff's claims based on res judicata and the statute of limitations. Per an order entered 2 March 2015, the trial court concluded that plaintiff's “claims herein were not brought within the applicable statute of limitations and therefore these claims should be dismissed.” It further concluded that plaintiff's “claims for damages herein that were litigated in 14 CVD5121¹ are barred by res judicata, and therefore these claims should be dismissed.” Accordingly, the court dismissed with prejudice all of plaintiff's claims. Plaintiff timely appeals.

II. Analysis

Plaintiff argues that the trial court erred in granting defendant's motion to dismiss because the face of plaintiff's complaint does not reveal that her claims are time-barred. Plaintiff contends that issuing findings of fact and resolving evidentiary conflicts is not within the scope of Rule 12. Because we agree, we do not reach plaintiff's additional arguments.

“On appeal of a 12(b)(6) motion to dismiss, this Court conducts a de novo review of the pleadings to determine their legal sufficiency and to determine whether the trial court's ruling on the motion to dismiss was correct.” Podrebarac v. Horack, Talley, Pharr, & Lowndes, P.A., 231 N.C.App. 70, 74, 752 S.E.2d 661, 663–64 (2013) (citation omitted). “[I]t is well established that ‘[w]hen the complaint discloses on its face that plaintiff's claim is barred by the statute of limitations, such defect may be taken advantage of by a motion to dismiss under Rule 12(b)(6).’ “ Fleet Real Estate Funding Corp. v. Blackwelder, 83 N.C.App. 27, 31, 348 S.E.2d 611, 614 (1986) (quoting F.D.I.C. v. Loft Apartments, 39 N.C.App. 473, 250 S.E.2d 693 (1979)). However, “[t]he only purpose of a Rule 12(b)(6) motion is to test the legal sufficiency of the pleading against which it is directed.” White v. White, 296 N.C. 661, 667, 252 S.E.2d 698, 702 (1979) (citing Sutton v. Duke, 277 N.C. 94, 176 S.E.2d 161 (1970)). “In deciding such a motion the trial court is to treat the allegations of the pleading it challenges as true.” Id. (citing Smith v. Ford Motor Co., 289 N.C. 71, 221 S.E.2d 282 (1976)). “The function of a motion to dismiss is to test the law of a claim, not the facts which support it․ Resolution of evidentiary conflicts is thus not within the scope of the Rule.” Id. (internal citation omitted).

Plaintiff notes that only two dates are mentioned in the complaint: 2005, the year plaintiff purchased the property, and 25 February 2008, the day plaintiff transferred the property to defendant. Thus, plaintiff argues that these dates could not lead the trial court to rule as a matter of law that her claims were barred by the statute of limitations.

Under the three-year statute of limitations in N.C. Gen.Stat. § 1–52(9) (2015) for relief on the ground of fraud or mistake, “the cause of action shall not be deemed to have accrued until the discovery by the aggrieved party of the facts constituting the fraud or mistake.” “Ordinarily, when the evidence is not conclusive or is conflicting, the question of whether plaintiff, in the exercise of due diligence, should have discovered the facts constituting mistake (and, therefore, fraud) more than three years prior to institution of the action is for the jury.” Hiatt v. Burlington Indus., Inc., 55 N.C.App. 523, 526, 286 S.E.2d 566, 568 (1982) (citing Lowery v. Wilson, 214 N.C. 800, 200 S.E. 861 (1939)).

As to plaintiff's second claim, “[c]onstructive trusts ․ are governed by the ten-year statute of limitations in N.C. Gen.Stat. 1–56.” Guy v. Guy, 104 N.C.App. 753, 755, 411 S.E.2d 403, 404 (1991) (citing Brisson v. Williams, 82 N.C.App. 53, 60, 345 S.E.2d 432, 436 (1986)). Similarly, an action to impose a resulting trust is governed by a ten-year statute of limitations. B M & W of Fayetteville, Inc. v. Barnes, 75 N.C.App. 600, 603, 331 S.E.2d 308, 311 (1985) (citing N.C. Gen.Stat. § 1–56 (1983); Bowen v. Darden, 241 N.C. 11, 84 S.E.2d 289 (1954)). “As fraud is not a component element of either, the resulting trust and equitable lien theories [are] not affected by the statute of limitations on fraud claims.” Guy, 104 N.C.App. at 755, 411 S .E.2d at 405.

Here, defendant argued to the trial court that a three-year statute of limitations applied to plaintiff's first claim, and he contended that the “alleged mistake took place in 2008.” The trial court acknowledged that the applicable time period is when “the fraud occurred or when it was reasonably discoverable.” Further, the trial court admitted, “I don't think her complaint says when she went back to [defendant] asking to have ․ the deed transferred back to her.” Nonetheless, the trial court questioned plaintiff, chose which statements to believe, and made a finding that, “based on what she said to me today,” plaintiff was on notice sometime in 2010 that defendant would not transfer the deed. Defendant did not make an argument as to why plaintiff's second claim should be dismissed, yet the trial court stated, “I'm dismissing the first two claims for statute of limitations.”

Here, while plaintiff set forth a number of allegations in her complaint in the first lawsuit, she did not admit when she discovered the alleged wrongs. Accordingly, whether the statute of limitations barred plaintiff's first claim was not discernible from the face of plaintiff's complaint. Additionally, plaintiff filed the first lawsuit within the ten-year statute of limitations that applies to her second claim based on trust theories. For these reasons, the trial court erred in granting defendant's motion to dismiss plaintiff's first two claims based on the statute of limitations.

Lastly, regarding plaintiff's third claim for money damages, plaintiff argues that “the face of the [c]omplaint did not reveal the existence of a res judicata defense that could be determined without appropriate discovery.” Here, the second lawsuit was decided before the first lawsuit, and defendant claims that the final judgment in the second lawsuit should bar one of plaintiff's claims in the first lawsuit. The transcript reveals that the trial court took a brief recess to retrieve and review the court file from the second lawsuit. The trial court then discussed with the parties the claim for damages in the second lawsuit and the corresponding dismissal.

“Under the doctrine of res judicata, a final judgment on the merits in a prior action in a court of competent jurisdiction precludes a second suit involving the same claim between the same parties or those in privity with them.” Bockweg v. Anderson, 333 N.C. 486, 491, 428 S.E.2d 157, 161 (1993) (citing Thomas M. McInnis & Assoc., Inc. v. Hall, 318 N.C. 421, 428, 349 S.E.2d 552, 556 (1986)). “The doctrine prevents the relitigation of ‘all matters ․ that were or should have been adjudicated in the prior action.’ “ Whitacre P'ship v. Biosignia, Inc., 358 N.C. 1, 15, 591 S.E.2d 870, 880 (2004) (quoting McInnis, 318 N.C. at 428, 349 S.E.2d at 556)).

In the first lawsuit, plaintiff alleged that defendant had “been unjustly enriched by obtaining the property without paying consideration to [plaintiff] in excess of $25,000.” In the second lawsuit, plaintiff alleged a claim for conversion of the real property and sought to recover the following additional damages: “cost of deed filing lawsuit, lost of income [sic], damage to property, light bill, water bill, false arrest, removed my tenant unlawfully, grassing cutting locks [sic].” The small claims court dismissed the second lawsuit with prejudice, as did the arbitrator after appeal. The arbitrator, however, did not enter a final judgment on the merits regarding plaintiff's claim in the first lawsuit that defendant has been unjustly enriched by obtaining the property without paying consideration. Accordingly, the trial court erred in concluding that res judicata bars plaintiff's claim for damages.

III. Conclusion

The trial court erred in dismissing plaintiff's first two claims pursuant to Rule 12(b)(6) based on the statute of limitations. The trial court also erred in dismissing plaintiff's third claim based on res judicata. We reverse and remand to the trial court for further proceedings.

REVERSED AND REMANDED.

Report per Rule 30(e).

FOOTNOTES

1.  The trial court's order states that the first lawsuit was given file number 14 CVD5121, and the second lawsuit was given file number 14 CVM 8967 in small claims court and file number 14 CVD 10115 on appeal to district court.