Christenbury Eye Center, P.A. v. Medflow, Inc.
| Decision Date | 19 June 2015 |
| Docket Number | 14 CVS 17400 |
| Citation | 2015 NCBC 61 |
| Court | Superior Court of North Carolina |
| Parties | CHRISTENBURY EYE CENTER, P.A., Plaintiff, v. MEDFLOW, INC. and DOMINIC JAMES RIGGI, Defendants. |
Shumaker, Loop & Kendrick, LLP by Frederick M. Thurman, Jr. for Plaintiff.
Robinson Bradshaw & Hinson, P.A. by Fitz E. Barringer, Heyward H. Bouknight, III, and Kindl Detar for Defendant Medflow, Inc.
Moore & Van Allen PLLC by Benjamin P. Fryer and Nader S. Raja for Defendant Dominic James Riggi.
James L. Gale, Chief Special Superior Court Judge for Complex Business Cases.
{1} THIS MATTER is before the Court on Defendant Medflow, Inc.'s Motion to Dismiss and Defendant Dominic James Riggi's Motion to Dismiss (collectively, "Motions") made pursuant to Rule 12(b)(6) of the North Carolina Rules of Civil Procedure ("Rule(s)"). For the reasons stated below, the Motions are GRANTED.
{2} Plaintiff initiated this action on September 11, 2014, bringing claims for breach of contract, fraud, unfair and deceptive trade practices ("UDTP"), and unjust enrichment, based on a contract entered on October 20, 1999. The matter was designated a mandatory complex business case and assigned to the undersigned on October 27, 2014.
{3} Defendant Dominic James Riggi ("Riggi") filed his motion on November 21, 2014, moving pursuant to Rule 12(b)(6) to dismiss all claims. Defendant Medflow, Inc. ("Medflow") also filed a Rule 12(b)(6) motion on December 1, 2014. The Motions have been fully briefed and are ripe for disposition.
{4} The following facts are based on the allegations of the Verified Complaint and are accepted as true for purposes of the Motions.
{5} Plaintiff Christenbury Eye Center, P.A. ("Christenbury") is a professional association located in Charlotte, North Carolina that offers ophthalmology and ophthalmic services. Dr. Jonathan D. Christenbury ("Dr. Christenbury") founded Christenbury.
{6} In 1998 or 1999, Dr. Christenbury approached Riggi about finding or developing a software package to help Dr. Christenbury and other ophthalmologists manage their practice and maintain their records.
{7} Around the same time, Riggi formed Medflow, which retained a software engineer to customize and enhance a general medical records management software platform. Dr. Christenbury paid Medflow in excess of $200, 000 to prepare a software package.
{8} On October 20, 1999, Christenbury and Medflow entered into an Agreement Regarding Enhancements ("Agreement"). (Verified Compl. ¶ 15, Ex. A.) The "Enhancements" are improvements to the original software platform, including "customized screens, interfaces, forms, [and] procedures." Christenbury assigned its rights in the platform and Enhancements to Medflow and retained rights to use and display the platform and Enhancements. Christenbury did not retain a right to sublicense or distribute the platform or Enhancements. Medflow was prohibited from selling the platform or Enhancements in North Carolina or South Carolina without Christenbury's written consent. Medflow was obligated to pay Christenbury a ten percent royalty for all fees received in association with the Enhancements' resale or provision, with a minimum yearly royalty of $500 for each of the five years after October 20, 1999. Medflow was to "provide Christenbury with a written report on a monthly basis which will include a detailed description of the fees received from [Medflow's] Customers during the prior month, along with payment to Christenbury of all corresponding fees due with respect to such charges for that prior month." Riggi signed the Agreement on behalf of Medflow and an acknowledgment binding him to the Agreement's terms in his individual capacity.
{9} Medflow never provided Christenbury with the required written report and never paid any royalties to Christenbury.
{10} In February 2001, Medflow informed Christenbury of modifications made to the original software and requested that the Agreement be modified, stating, (Verified Compl. ¶ 16.) The parties did not ultimately amend the Agreement. Christenbury continued to use the original platform. Medflow sold the newer version without reporting sales or paying royalties to Christenbury.
{11} In 2002, an article concerning electronic medical records appeared in the publication, Opthalmology Management. Riggi was interviewed for the article, which stated that Medflow "created and customizes the EMR in use at Christenbury Eye Center and at Beach Eye Care." (Verified Compl. ¶ 18.)
{12} Christenbury received updates to and services for the original platform "[f]rom time to time after the execution of the Agreement" from service providers directly associated with Medflow. (Verified Compl. ¶¶ 22, 23.) In 2011, Medflow's service provider refused to provide Christenbury an update, stating that it no longer supported Christenbury's platform. Shortly thereafter, the service provider's agent demonstrated Medflow's newer product for Dr. Christenbury.
{13} Plaintiff alleges that, "[u]pon information and belief, since October 1999, Medflow has further developed, modified, and 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 the Practice." (Verified Compl. ¶ 28.) The Verified Complaint does not clearly indicate when Plaintiff discovered the facts on which this allegation is based.
{14} On a motion to dismiss pursuant to Rule 12(b)(6), the Court inquires "whether, as a matter of law, the allegations of the complaint, treated as true, are sufficient to state a claim upon which relief may be granted under some legal theory, whether properly labeled or not." Crouse v. Mineo, 189 N.C.App. 232, 237, 658 S.E.2d 33, 36 (2008) (quoting Harris v. NCNB Nat'l Bank of N.C. , 85 N.C.App. 669, 670, 355 S.E.2d 838, 840 (1987)). The Court may grant a motion to dismiss under Rule 12(b)(6) where one of the following is true: (1) the complaint on its face reveals that no law supports the plaintiff's claim; (2) the complaint on its face reveals the absence of facts sufficient to make a good claim; or (3) the complaint discloses some fact that necessarily defeats the plaintiff's claim. Oates v. JAG, Inc., 314 N.C. 276, 278, 333 S.E.2d 222, 224 (1985).
{15} For purposes of the Motions, the Court accepts the factual allegations of the Verified Complaint as true without assuming the veracity of Plaintiff's legal conclusions. Walker v. Sloan, 137 N.C.App. 387, 392, 592 S.E.2d 236, 241 (2000).
{16} Plaintiff claims that it is entitled to recover for breach of contract, fraudulent concealment, UDTP, and unjust enrichment. The Court addresses the claims in that order, finding that each should be dismissed.
{17} Plaintiff has clearly pled that there was a contract that Defendants breached. The question is whether that claim is time-barred. North Carolina imposes a three-year statute of limitations for breach of contract claims. N.C. Gen. Stat. § 1-52(1) (2014). Liptrap v. City of High Point, 128 N.C.App. 353, 355, 496 S.E.2d 817, 819 (1998) (quoting Pembee Mfg. Corp. v. Cape Fear Const. Co., 313 N.C. 488, 493, 329 S.E.2d 350, 354 (1985)). Defendants contend that Plaintiff's breach of contract claim accrued when Defendants first failed to make reports or make royalty payments, so that the claim is outside the limitations period. Plaintiff claims that any limitations period was tolled by Defendants' fraudulent concealment. Alternatively, Plaintiff claims that it is entitled, at a minimum, to royalty payments due within the three years prior to the filing of the Verified Complaint. Defendants counter that all claims have been waived.
{18} Typically, a contract claim begins to accrue when the breach occurs. PharmaResearch Corp. v. Mash, 163 N.C.App. 419, 424, 594 S.E.2d 148, 152 (2004). Occasionally, "equity will deny the right to assert [a statute of limitations] defense when delay has been induced by acts, representations, or conduct, the repudiation of which would amount to a breach of good faith." Watkins v. Cent. Motor Lines, Inc., 279 N.C. 132, 139–40, 181 S.E.2d 588, 593 (1971) (quoting Nowell v. Great Atl. & Pac. Tea Co., 250 N.C. 575, 579, 108 S.E.2d 889, 891 (1959)). This results from application of the doctrine of equitable estoppel, which "arises when an individual by his acts, representations, admissions or silence, when he has a duty to speak, intentionally or through culpable negligence, " induces another to believe in and rely upon the existence of certain facts to his detriment. Miller v. Talton, 112 N.C.App. 484, 488, 435 S.E.2d 793, 797 (1993). To take advantage of equitable estoppel, a party asserting an otherwise stale claim must specifically allege: "(1) conduct on the part of the party sought to be estopped which amounts to a false representation or concealment of material facts; (2) the intention that such conduct will be acted on by the other party; and (3) knowledge, actual or constructive, of the real facts." Robinson v. Bridgestone/Firestone N.A. Tire, LLC, 209 N.C.App. 310, 319, 703 S.E.2d 883, 889 (2011) (quoting Bryant v. Adams, 116 N.C.App. 448,...
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