Christenbury Eye Center, P.A. v. Medflow, Inc., 081817 NCSC, 141PA16

Docket Nº:141PA16
Opinion Judge:NEWBY, Justice.
Attorney:Shumaker, Loop & Kendrick, LLP, by Frederick M. Thurman, Jr., for plaintiff-appellant. Robinson, Bradshaw & Hinson, P.A., by Douglas M. Jarrell and Fitz E. Barringer, for defendant-appellee Medflow. Inc. Moore & Van Allen PLLC, by Benjamin P. Fryer and Nader S. Raja, for defendant-appellee Domini...
Case Date:August 18, 2017
Court:Supreme Court of North Carolina




No. 141PA16

Supreme Court of North Carolina

August 18, 2017

          Heard in the Supreme Court on 21 March 2017.

         On writ of certiorari pursuant to N.C. G.S. § 7A-32(b) to review an order entered on 23 June 2015 by Judge James L. Gale, Chief Special Superior Court Judge for Complex Business Cases appointed by the Chief Justice under N.C. G.S. § 7A-45.4, in Superior Court, Mecklenburg County, dismissing plaintiff's complaint.

          Shumaker, Loop & Kendrick, LLP, by Frederick M. Thurman, Jr., for plaintiff-appellant.

          Robinson, Bradshaw & Hinson, P.A., by Douglas M. Jarrell and Fitz E. Barringer, for defendant-appellee Medflow. Inc.

          Moore & Van Allen PLLC, by Benjamin P. Fryer and Nader S. Raja, for defendant-appellee Dominic James Riggi.

          NEWBY, Justice.

         North Carolina law has long recognized the principle that a party must timely bring an action upon discovery of an injury to avoid dismissal of the claim. Statutes of limitations require the pursuit of claims to occur within a certain period after discovery, thereby striking the balance between one's right to assert a claim and another's right to be free from a stale claim. Here plaintiff's action arises from an unfulfilled business agreement. Plaintiff's complaint reveals, however, that plaintiff had notice of the breach of the agreement and its resulting injuries fourteen years before commencing the current action. Because plaintiff failed to pursue its claims within the statute of limitations period, plaintiff's claims are time barred. Accordingly, we affirm the trial court's order dismissing plaintiff's claims.

         Jonathan D. Christenbury, M.D. founded plaintiff Christenbury Eye Center, P.A., a professional association that offers ophthalmology services. In 1998 or 1999, Dr. Christenbury approached defendant Dominic James Riggi, a consultant, about developing a software management package for plaintiff. Upon Riggi's recommendation, plaintiff purchased a generalized software platform, with the idea that Riggi and plaintiff would later customize and enhance the platform for plaintiff's practice needs and for possible sale to other physician practices and customers. Around the same time, Riggi formed defendant Medflow, Inc., a medical record software development company.

         In October 1999, plaintiff and defendants entered into an "Agreement Regarding Enhancements" to the original software platform (the Agreement). The Enhancements are improvements to the software platform such as "customized screens, interfaces, forms, [and] procedures." Under the Agreement, plaintiff assigned its rights in the Enhancements to defendants. "As consideration for the assignment of rights . . . [defendants] agree[d] to pay [plaintiff] a royalty of ten percent (10%) of the gross amount of all fees . . . received" from any sales of the Enhancements made "on or after October 1, 1999" and to "provide [plaintiff] with a written report on a monthly basis . . . includ[ing] a detailed description of the fees received from [defendants'] Customers during the prior month, along with payment to [plaintiff] of all corresponding fees due with respect to such charges for that prior month." The Agreement also required defendants to pay plaintiff "a minimum royalty in the amount of Five Hundred Dollars ($500.00) each year for the first five years after [20 October 1999]" and restricted defendants from selling the Enhancements to customers within North Carolina and South Carolina without first obtaining plaintiff's written consent.

         Defendants never performed any of their obligations under the Agreement. Defendants never provided plaintiff with a single monthly report detailing the fees received from defendants' customers nor paid any corresponding fees. Defendants failed to make the first $500 minimum royalty payment, which became due on 20 October 2000, and never paid any royalties thereafter. Defendants also allegedly sold the Enhancements to other practice groups and customers in the restricted areas of North Carolina and South Carolina without plaintiff's express consent as early as 1999.

         For the next ten years, defendants allegedly continued to be in breach of the Agreement, never providing plaintiff a written sales report, never making any royalty payments, and never obtaining plaintiff's consent for restricted sales. Plaintiff, however, continued to use the software platform and received periodic software updates from Medflow affiliated service providers. During this time, plaintiff did not raise any question or concern regarding its rights to receive written reports and royalty payments, nor did it inquire about restricted sales.

         Despite having never received the benefit of its bargain, plaintiff waited fourteen years before filing this action on 22 September 2014. Plaintiff's complaint asserts four claims against defendants: breach of contract, fraud, unfair and deceptive trade practices, and unjust enrichment.1 Plaintiff alleges that "since October 1999, [defendants have] . . . sold the Enhancements, and derivatives thereof, to other ophthalmologic practices, both inside and outside the restricted territory of North Carolina and South Carolina, without paying royalties to [plaintiff], " and that "[a]t no time did [defendants] . . . inform [plaintiff] that [defendants] had sold further developments or modifications to the Enhancements . . . . [or] paid to [plaintiff] or accounted for any royalties due under the Agreement."

         Defendants moved to dismiss all claims under Rule 12(b)(6) of the North Carolina Rules of Civil Procedure, asserting that North Carolina's statutes of limitations barred plaintiff's action. N.C. G.S. §§ 1-52, 75-16.2 (2015). In response, plaintiff essentially argued that the Agreement should be treated as an installment contract for limitations purposes, with a new limitations period beginning upon the failure to make each payment, thus enabling plaintiff to seek recovery on royalty payments due within the three years before the filing of its complaint. See Martin v. Ray Lackey Enters., 100 N.C.App. 349, 357, 396 S.E.2d 327, 332 (1990) ("[W]here obligations are payable in installments, the statute of limitations runs against each installment independently as it becomes due."). Defendants asserted that under North Carolina law the Agreement should not be considered an installment contract.

         Following a hearing, the trial court granted defendants' motions to dismiss. Christenbury Eye Ctr., P.A. v. Medflow, Inc., No. 14 CVS 17400, 2015 WL 3823817, at *8 ( N.C. Super. Ct. Mecklenburg County (Bus. Ct.) June 19, 2015). The trial court determined that the allegations of plaintiff's complaint "reveal...

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