Eagle Nation, Inc. v. Market Force, Inc., 5:00-CV-565-BR(2).

• Decision Date: 02 May 2001
• Docket Number: No. 5:00-CV-565-BR(2).,5:00-CV-565-BR(2).
• Parties: EAGLE NATION, INC., Plaintiff, v. MARKET FORCE, INC., Laverne M. Clayton, Individually, and Nancy P. Johnson, Individually, Defendants.
• Court: U.S. District Court — Eastern District of North Carolina

180 F.Supp.2d 752

EAGLE NATION, INC., Plaintiff, v. MARKET FORCE, INC., Laverne M. Clayton, Individually, and Nancy P. Johnson, Individually, Defendants.

No. 5:00-CV-565-BR(2).

United States District Court, E.D. North Carolina.

May 2, 2001.

John D. Madden, Smith, Anderson, Blount, Dorsett, Mitchell & Jernigan, Raleigh, NC, for Plaintiff.

Charles C. Meeker, Parker, Poe, Adams & Bernstein, Raleigh, NC, for Defendants.

ORDER

BRITT, Senior District Judge.

Defendants' motion for judgment on the pleadings is before the court.

On 2 August 2000, plaintiff filed a complaint against defendants alleging breach of contract, negligence, fraud and fraudulent inducement, and civil conspiracy. Defendants filed an answer and counterclaim on 30 August 2000. Plaintiff filed an answer to the counterclaim on 20 September 2000. Defendants then filed this motion for judgment on the pleadings on 27 October 2000, and plaintiffs filed a response on 20 November 2000. Defendants filed a reply on 28 November 2000, and the motion is now ripe for review.

Facts

Marketforce is an advertising company located in Raleigh, North Carolina. Defendants Clayton and Johnson are the co-presidents and owners of Marketforce. (Ans.¶¶ 1-2.) Plaintiff is a Texas corporation that serves as a buying group and marketing arm for its constituent members, which sell automotive parts and supplies. (Compl.¶¶ 4, 7.) Marketforce and plaintiff entered into an agreement in October 1996 pursuant to which defendants agreed to provide advertising services to plaintiff. (Ans., Ex. C.) Between October 1996 and April 1997, Marketforce undertook various advertising efforts on behalf of plaintiff, and plaintiff made several payments to defendants. Plaintiff wrote a letter terminating the agreement with defendants, which defendants received on 22 April 1997. (Ans., Ex. A.) Correspondence between the parties ensued and continued throughout the summer, regarding the settlement of accounts between the parties. (Ans., Ex. B.)

Ultimately, in June 1998, plaintiff filed suit against defendants and others in the United States District Court for the Southern District of Texas. (Ans., Ex. D.) The court dismissed that suit for lack of subject matter jurisdiction in August 1998. (Ans., Ex. E.) In August 1998, plaintiff refiled the action in state court in Texas. (Ans., Ex. F.) In June 1999, the Texas court dismissed the action. In December 1999, plaintiff refiled its action against defendants in this court. (Ans., Ex. H.) This court dismissed plaintiff's action without prejudice in July 2000 based on plaintiff's failure to serve process in accordance with Fed.R.Civ.P. 4(m).

Plaintiff filed claims against defendants once again on 2 August 2000, and this motion ensued.

Standard of Review

Defendants have requested this court to enter judgment in their favor on the pleadings pursuant to Fed.R.Civ.P. 12(c).

The district court applies the same standard under Rule 12(c) as it applies under Fed.R.Civ.P. 12(b)(6).... Taking the nonmoving party's allegations as true, dismissal is inappropriate unless it appears beyond doubt that the non-moving party can prove no facts sufficient to support his claim for relief. See Hishon v. King & Spalding, 467 U.S. 69, 73, 104 S.Ct. 2229, 81 L.Ed.2d 59 (1984).

Razor v. Perdue Farms Inc., 176 F.3d 475, 1999 WL 178782, *1 (4th Cir., Apr. 1, 1999).

For purposes of this motion, the court cannot consider materials outside the pleadings without coverting the motion to one for summary judgment. Fed.R.Civ.P. 12(c). The court may, however, consider the documents and exhibits attached to and incorporated into the pleadings themselves. See Cash v. State Farm Mut. Auto. Ins. Co., 137 N.C.App. 192, 202, 528 S.E.2d 372, 378 (2000) (when ruling on a motion for judgment on the pleadings, the trial court "is to consider only the pleadings and any attached exhibits, which become part of the pleadings"), aff'd, 353 N.C. 257, 538 S.E.2d 569 (2000). The Seventh Circuit has elaborated upon this rule.

As the title of the rule implies, Rule 12(c) permits a judgment based on the pleadings alone.... The pleadings include the complaint, the answer, and any written instruments attached as exhibits. Fed.R.Civ.P. 10(c) ("A copy of any written instrument which is an exhibit to a pleading is part thereof for all purposes.");.... Under Rule 10(c), the attached documents are incorporated into the pleadings. Historically, this Court has interpreted the term "written instrument" as used in Rule 10(c) to include documents such as affidavits, ..., and letters, ... as well as contracts, ... and loan documentation....

Northern Indiana Gun & Outdoor Shows, Inc. v. City of South Bend, 163 F.3d 449, 452-53 (7th Cir.1998) (citations omitted).

In accord with the foregoing authorities, this court will consider only the complaint, defendants' answer and counterclaim, and plaintiff's answer to defendants' counterclaim, along with the materials appended to those pleadings by both parties in its review of defendants' 12(c) motion. The court will not consider any documents or affidavits submitted in conjunction with the response to defendants' motion or defendants' reply.

Statutes of Limitations

Plaintiff has asserted the following claims against defendants: breach of contract; negligence; fraud and fraudulent inducement; and civil conspiracy. Defendants contend, among other arguments, that plaintiff's contract claim is barred by North Carolina's three-year statute of limitations under N.C.Gen.Stat. § 1-52(1); that its negligence and conspiracy claims are barred by North Carolina's three-year statute of limitations under N.C.Gen.Stat. § 1-52(5),¹ and that its fraud and fraudulent inducement claims are barred by North Carolina's three-year statute of limitations under N.C.Gen.Stat. § 1-52(9).²

Plaintiff contends that genuine issues of material fact with respect to its contract claim preclude judgment on the pleadings on a statute of limitations basis. Plaintiff has not explicitly disputed defendants' claim that its negligence, fraud, and conspiracy claims are barred by the applicable statutes of limitations. (See Def.s' Reply at 6, 8 and 9.) Instead, plaintiff has merely argued that the substantive law of Texas, rather than that of North Carolina, should govern the resolution of its claims. Plaintiff requests this court to deny defendants' motion on that basis or, in the alternative, to permit the parties to brief the issue as to which state's substantive law should govern. Plaintiff concedes, however, that North Carolina's procedural law applies to the issues in this case. (Pl.'s Resp. at 3.)

This court must apply North Carolina's choice of law rules to determine which state's law governs the resolution of plaintiff's claims. Wells v. Liddy, 186 F.3d 505, 521 (4th Cir.1999) ("federal court sitting in diversity must apply the choice-of-law rules from the forum state"), cert. denied, 528 U.S. 1118, 120 S.Ct. 939, 145 L.Ed.2d 817 (2000). North Carolina law requires this court to apply North Carolina's procedural rules, and under North Carolina law, the statutes of limitations at issue here are procedural rules.

A district court sitting in a diversity action must apply the law of the forum state including its choice of law rules. Klaxon Co. v. Stentor Elec. Mfg., 313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941); Fortress Re, Inc. v. Central Nat'l Ins. Co., 766 F.2d 163 (4th Cir. 1985). In tort actions, North Carolina courts adhere to the rule of lex loci and apply the substantive laws of the state in which the injuries were sustained. Charnock v. Taylor, 223 N.C. 360, 361, 26 S.E.2d 911, 913 (1943); see also United Virginia Bank v. Air-Lift Assoc., Inc., 79 N.C.App. 315, 321, 339 S.E.2d 90, 93 (1986). In matters of procedure, North Carolina courts apply the rule of lex fori and adhere to the procedural rules of the forum state. Charnock, 223 N.C. at 361, 26 S.E.2d at 913. Additionally, North Carolina law is dispositive on whether an issue is substantive or procedural. Williams v. Riley, 56 N.C.App. 427, 429, 289 S.E.2d 102, 104 (1982).³ Under North Carolina law, a statute of limitations is a procedural device, and in actions in North Carolina courts, the forum's statute of limitations must be applied. Sayer v. Henderson, 225 N.C. 642, 643, 35 S.E.2d 875, 876 (1945).

Johnson v. Holiday Inn of America, Inc., 895 F.Supp. 97, 98 (M.D.N.C.1995).

The legal logic behind the rule [that a federal court sitting in a diversity action applies the statute of limitations which would be applied by a court of the forum state] is simple. Because statutes of limitation are deemed to affect only the remedy and not the substantive right, they are deemed procedural for choice of law purposes. As a result, the governing statute is usually that of the forum where the remedy is sought and not the statute of the place where the action arose. As a further consequence the statute of the forum may bar the remedy even though the action is not barred in the jurisdiction where it arose. Finally, insofar as the application of the forum state's conflict of laws rules depends on the distinction between matters of substance and matters of procedure, the forum state's classification of such matters applies.

Stokes v. Southeast Hotel Properties, Ltd., 877 F.Supp. 986, 994-95 (W.D.N.C.1994). The Stokes court went on to note that such statutes of limitations "operate inexorably without reference to the merits of plaintiff's cause of action and the court is without discretion when considering whether a claim is barred by the limitations statute." Id. at 995.

As noted above, plaintiff acknowledges in its brief that the procedural law of North Carolina applies to the issues in this case. (Pl.'s Resp. at 3.)⁴ Applying these principles to plaintiff's claims and defendants' motion for judgment on the pleadings, this court must conclude that plaintiff's claims are barred by the applicable statutes of limitations under North...