Spoor v. John M. Barth, Jr., John Barth (Sr.), & JR Int'l Holdings, LLC

• Decision Date: 06 February 2018
• Docket Number: No. COA17-308,COA17-308
• Citation: 257 N.C.App. 721,811 S.E.2d 609
• Court: North Carolina Court of Appeals
• Parties: Richard B. SPOOR, Derivatively, ON BEHALF OF Defendant JR INTERNATIONAL HOLDINGS, LLC, Plaintiff, v. John M. BARTH, Jr., John Barth (Sr.), and JR International Holdings, LLC, Defendant.

257 N.C.App. 721

811 S.E.2d 609

Richard B. SPOOR, Derivatively, ON BEHALF OF Defendant JR INTERNATIONAL HOLDINGS, LLC, Plaintiff,

v.John M. BARTH, Jr., John Barth (Sr.), and JR International Holdings, LLC, Defendant.

No. COA17-308

Court of Appeals of North Carolina.

Filed: February 6, 2018

Barry Nakell, for plaintiff-appellant.

WilsonRatledge, PLLC, by Reginald B. Gillespie, Jr., Durham and N. Hunter Wyche, Jr., Raleigh; and Foley & Lardner LLP, by Michael J. Small, pro hac vice, for defendant-appellee John M. Barth.

Manning Fulton & Skinner, P.A., Raleigh, by Judson A. Welborn and J. Whitfield Gibson, for defendant-appellee John Barth, Jr.

ELMORE, Judge.

Richard B. Spoor (plaintiff), derivatively on behalf of JR International Holdings, LLC ("JR Holdings"), appeals from an order (1) dismissing under Rule 12(b)(6) his derivative claims against John Barth Sr. ("Sr.") and John Barth Jr. ("Jr.") (defendants) as barred by the statute of limitations and (2) denying his Rule 15(a) motion to amend his complaint to add additional derivative claims as futile. We affirm in part and reverse in part.

I. Background

This is Spoor’s second appeal to our Court. While we address only the factual and procedural background relevant to address this appeal, a more thorough background of this case may be found in our prior decision. See Spoor v. Barth , 244 N.C. App. 670, 671-76, 781 S.E.2d 627, 629–32, disc. rev. and cert. denied , ––– N.C. ––––, 787 S.E.2d 38, and disc. rev. and cert. denied , ––– N.C. ––––, 789 S.E.2d 4 (2016) (" Spoor I ").

In 2012, Spoor filed his first amended complaint ("FAC") and second amended complaint ("SAC") (collectively, the "2012 Complaint") against Sr. and Jr., asserting several individual claims against both defendants and one derivative claim, on behalf of JR Holdings, against Jr. for breach of fiduciary duty. In response, Sr. moved for summary judgment on grounds that Spoor lacked standing and that his claims were barred by the statutes of limitation; Jr. moved for summary judgment on the ground that Spoor lacked standing. On 19 June 2014, the trial court granted summary judgment in defendants’ favor as to Spoor’s individual claims on the grounds asserted by defendants. On 17 September 2014, Spoor moved under Rule 41(a)(1) of our Rules of Civil Procedure to voluntarily dismiss his derivative claim. Spoor then appealed the summary judgment order, which we reversed. See Spoor I , 244 N.C. App. at 684-85, 781 S.E.2d at 637. We held that the statute of limitations issue as to Spoor’s individual claims against Sr. raised a question of fact for the jury, and that Spoor had standing to sue defendants individually. Id. at 681-82, 684-85, 781 S.E.2d at 635, 637.

On 10 September 2015, within one year of his Rule 41(a)(1) dismissal, Spoor filed another complaint ("2015 Complaint"), asserting derivative claims against both defendants for breach of contract ("first 2015 derivative claim") and for breach of fiduciary duty ("second 2015 derivative claim"). On 7 October 2015, Spoor amended his 2015 Complaint as a matter of course under Rule 15(a) of our Rules of Civil Procedure "solely to change the style of the case to show that he is bringing the case derivatively only and not individually." On 2 November 2015, Spoor again moved under Rule 15(a) to amend his 2015 Complaint to add derivative claims for fraud and for unfair and deceptive trade practices ("UDTP") against both defendants. Relevant here, defendants moved under Rule 12(b)(6) to dismiss the 2015 Complaint, alleging that Spoor’s first and second 2015 derivative claims were barred by the statutes of limitation, and that Rule 41(a)(1)’s one-year extension period did not apply to save those claims.

After these and other motions were consolidated and heard on 8 April 2016, the trial court entered an order on 12 October 2016. In relevant part, that order granted defendants’ Rule 12(b)(6) motion on the ground that Spoor’s derivative claims were barred by the statutes of limitation, thereby dismissing those claims with prejudice; and denied Spoor’s Rule 15(a) motion to add the derivative fraud and UDTP claims in relevant part for futility, effectively ending Spoor’s 2015 action. Spoor appeals.

II. Analysis

On appeal, Spoor contends the trial court erred by dismissing with prejudice his first and second 2015 derivative claims under Rule 12(b)(6). He contends the trial court erroneously concluded that his 2012 Complaint neither alleged (1) those derivative claims against defendants, nor (2) the derivative fraud and UDTP claims, on the ground that he effectively incorporated by reference those claims in his 2012 Complaint under Rule 10(c) of our Rules of Civil Procedure. Spoor further contends that the trial court erred by concluding (3) his derivative fraud and UDTP claims would not relate back to the date he filed his 2012 Complaint under Rule 15(c) of our Civil Procedure Rules and, therefore, that the trial court (4) abused its discretion by denying his Rule 15(a) motion to add those claims on the ground that his proposed amendment would be futile.

A. Rule 12(b)(6) Dismissal

Spoor first contends the trial court erred in dismissing on statute-of-limitation grounds his first and second 2015 derivative claims against defendants. He argues the trial court erroneously concluded that he did not assert these claims in his 2012 Complaint, because, Spoor contends, he effectively "incorporat[ed] those claims in his derivative claim" under Rule 10(c). Thus, Spoor argues, Rule 41(a)(1)’s relation-back provision applied to interpose a filing date on those claims of the date his 2012 Complaint was filed and, therefore, his first and second 2015 derivative claims were asserted within the applicable statutory limitation periods. We disagree.

We review de novo a Rule 12(b)(6) dismissal order. State Emps. Ass’n of N.C., Inc. v. N.C. Dep’t of State Treasurer , 364 N.C. 205, 210, 695 S.E.2d 91, 95 (2010). The scope of our review is "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." Id. (citations and quotation mark omitted). Our "system of notice pleading affords a sufficiently liberal construction of complaints so that few fail to survive a motion to dismiss." Wray v. City of Greensboro , ––– N.C. ––––, ––––, 802 S.E.2d 894, 898 (2017) (citation and quotation mark omitted). But "[d]ismissal is warranted if an examination of the complaint reveals that no law supports the claim, or that sufficient facts to make a good claim are absent, or that facts are disclosed which necessarily defeat the claim." State Emps. Ass’n of N.C. , 364 N.C. at 210, 695 S.E.2d at 95 (citation omitted). Claims asserted after the statutory limitation period has expired cannot survive. See, e.g. , Marzec v. Nye , 203 N.C. App. 88, 93, 690 S.E.2d 537, 541 (2010) ("[A] motion to dismiss under Rule 12(b)(6) is an appropriate method of determining whether the statutes of limitation bar [a] plaintiff’s claims if the bar is disclosed in the complaint." (citation and quotation marks omitted)).

Rule 8(a)(1) of our Rules of Civil Procedure requires that complaints include "[a] short and plain statement of the claim sufficiently particular to give the court and the parties notice of the transactions, occurrences, or series of transactions or occurrences, intended to be proved showing that the pleader is entitled to relief...." N.C. Gen. Stat. § 1A-1, Rule 8(a)(1) (2015). A complaint sufficiently states a claim upon which relief can be granted when

it gives sufficient notice of the events or transactions which produced the claim to enable the adverse party to understand the nature of it and the basis for it, to file a responsive pleading, and by using the rules provided for obtaining pretrial discovery to get any additional information he may need to prepare for trial.

Wray , ––– N.C. at ––––, 802 S.E.2d at 898 (citation and quotation marks omitted).

Here, in his 2012 Complaint, Spoor advanced in relevant part the following individual claims: (1) a breach of contract as a third-party beneficiary claim against Sr., (2) a breach of fiduciary duty claim against Jr., (3) a fraud claim against both defendants, and (4) a UDTP claim against both defendants. After listing those claims, Spoor also advanced a single "DERIVATIVE CLAIM" in which he "reallege[d] the allegations of" every preceding paragraph of his 2012 Complaint, but specifically advanced only a derivative breach of fiduciary duty claim against Jr ("2012 derivative claim"). The 2012 derivative claim alleged in relevant part:

143. Plaintiff realleges the allegations of Paragraphs 1 through 142.

144. Barth, Jr. owes a fiduciary duty to JR International Holdings, LLC, and to Plaintiff.

145. Barth, Jr. has breached his fiduciary duty by failing to perform on his commitment to invest or contribute the sum of $8,000,000 to JR International Holdings, LLC.

146. This breach by Barth, Jr. was knowing, willful, wanton and grossly negligent.

147. Barth, Jr’s breach has damaged JR International Holdings, LLC and Plaintiff in an amount in excess of $8,000,000.

148. Plaintiff has made several demands in and after October 2011 on Barth, Jr. that he fulfill his obligation to invest or contribute $8,000,000 into JR International Holdings, LLC, but Barth, Jr. has continued to fail and refuse to do so. On February 11, 2009, Plaintiff, through counsel, wrote to Barth, Jr., advising Barth, Jr. of his failure to make his contractual contribution of funds to JR International Holdings, LLC, and, demanded that Barth, Jr. remedy the situation by making his agreed payment of $8,000,000 to JR International Holdings, LLC. On October 5, 2011, Plaintiff filed his original Complaint in this action against Barth, Jr., in which he complained that Barth, Jr. had failed to fulfill his obligation to invest or contribute $8,000,000 into JR International Holdings, LLC, and demanded that

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