Opinion
COA22-955
10-17-2023
RYAN KNUDSON, Plaintiff, v. LENOVO (UNITED STATES) INC., Defendant.
Carnes Warwick PLLC, by Tara Warwick, for plaintiff-appellant. Womble Bond Dickinson (US) LLP, by Raymond M. Bennett and E. Carson Lane, for defendant-appellee.
An unpublished opinion of the North Carolina Court of Appeals does not constitute controlling legal authority. Citation is disfavored but may be permitted in accordance with the provisions of Rule 30(e)(3) of the North Carolina Rules of Appellate Procedure.
Heard in the Court of Appeals 23 August 2023.
Appeal by Plaintiff from order entered 1 June 2022 by Judge R. Allen Baddour, Jr., in Wake County Superior Court. Wake County, No. 22 CVS 1818
Carnes Warwick PLLC, by Tara Warwick, for plaintiff-appellant.
Womble Bond Dickinson (US) LLP, by Raymond M. Bennett and E. Carson Lane, for defendant-appellee.
MURPHY, Judge.
Plaintiff brought claims against Defendant for constructive fraud, unfair and deceptive trade practices, unjust enrichment, and violations of the Wage &Hour Act, all of which the trial court dismissed in accordance with Rules 12(b)(6) and 12(c) of our Rules of Civil Procedure. On appeal, Plaintiff argues none of his claims were correctly dismissed. As his claims for constructive fraud, unfair and deceptive trade practices, and unjust enrichment were all either lacking an essential element or time- barred, we affirm the dismissal of those claims under Rules 12(b)(6) and 12(c). Furthermore, while the complaint itself could not support a dismissal of all of Plaintiff's claims arising under the Wage &Hour Act under Rule 12(b)(6), the trial court's further consideration of exhibits attached to Defendant's answer justified this claim's dismissal under Rule 12(c). Accordingly, we modify and affirm the trial court's ruling.
BACKGROUND
This case involves claims by Plaintiff Ryan Knudson against Defendant Lenovo (United States) Inc., his prior employer, arising out of Lenovo's alleged failure to pay Knudson certain monetary awards for several "Invention Disclosures" that he submitted between May 2016 and October 2017 as part of Lenovo's internal patent development program. Several of Knudson's "Invention Disclosures" were either under review by Lenovo or in the patent filing process when Knudson was laid off in October 2017. Lenovo later informed Knudson that he was ineligible to receive any further awards under the program because he was no longer an active employee.
Plaintiff filed the complaint initiating this action in Wake County Superior Court on 9 February 2022, asserting claims against Lenovo for constructive fraud, unfair and deceptive trade practices under N.C. G.S. § 75-1.1 ("UDTP"), unjust enrichment, and violations of the Wage &Hour Act. The relevant language of the complaint alleges as follows:
V. FACTUAL ALLEGATIONS
7. Upon information and belief, Defendant operates as and represents themselves as a company in the business of the selling of personal computers, computer parts, software, and services.
8. Plaintiff received an offer for employment from [] Defendant on or around [31 March] 2016 and began employment as a Natural Language Processing (NLP) and Machine Leaming Engineer with [] Defendant on or around [16 May] 2016.
9. Plaintiff's job duties included simplifying Chinese natural language processing and assisting with automatic language identification for Lenovo products.
10. Plaintiff's job duties did not include inventing new marketable products for [] Defendant.
11. In fact, [] Defendant communicated to all employees, including [] Plaintiff, an option to participate in a voluntary patent program ("Patent Program") whereby [] Defendant solicited disclosures of proprietary, patentable subject matter from Patent Program participants ("Invention Disclosures") that it intended to evaluate for potential value as marketable new products.
12. Upon information and belief, while describing its Patent Program, [] Defendant and [] Defendant's attorneys provided information about the legal patent process to prospective participants, including [] Plaintiff.
13. Upon information and belief, [] Defendant and its attorneys represented that [] Defendant would provide assistance in the patent application process to Patent Program participants; instead, [] Defendant and its attorneys submitted patent applications on [] Defendant's own behalf for the Invention Disclosures, then directed Patent Program participants to assign their related rights to [] Defendant.
14. Contrary to their actions, [] Defendant described the purpose of its Patent Program as being related to supporting diversity in inventorship and "'about making sure these [patent] processes are built to serve everyone, not just those who are familiar with the process or are already empowered to participate.'" ....
15. Additionally, [] Defendant stressed that participation in the Patent Program was expected to be completed outside of the course of regular employment, noting in promotional materials that were distributed to [] Plaintiff, "Have Fun! Brainstorming can be a nice break from the rigors of your day-to-day job."
16. As further incentive to submit confidential, proprietary Invention Disclosures, [] Defendant represented that Patent Program participants could be eligible to receive standardized awards if, in [] Defendant's sole discretion, disclosures reached specific milestones in [] Defendant's review process.
17. According to promotional materials provided to [] Plaintiff, the review-process steps involved in [] Defendant's Patent Program generally include some or all of the following:
a. Submission of an Invention Disclosure by an inventor to an invention review board consisting of []technically experienced individuals, one or more subject matter experts, and a patent attorney . . .;
b. Inventor participation in an initial Review Board meeting to explain the Invention Disclosure and answer questions from the Review Board;
c. Review Board consideration for further evaluation of the Invention Disclosure for patent filing potential based on the Review Board's identification of the Invention Disclosure's novelty and value;
d. Review Board vote to either close or continue further consideration of the Invention Disclosure;
e. Upon vote for further consideration, review of the Invention Disclosure by [] Defendant's intellectual
property law division . . . for a determination on whether to file; and
f. Upon determination by the IP Division to file, docketing the disclosure and submitting it to [] Defendant's attorneys to draft and file the respective patent application;
18. Promotional materials provided to [] Plaintiff also specified, with no indication as to a timeframe for payment, that general [a]wards in the Patent Program could include some or all of the following: $1,050[.00] for each patent application filed (capped at $4,200[.00] per disclosure) and $500[.00] for each patent grant (capped at $2,000[.00] per disclosure). Annual awards were also given to the "Inventor of Year" in the amount of $5,000[.00] for the most patent dockets filed in the fiscal year, and a "Most Valuable Patent" award in the amount of $2,000[.00] (capped at $8,000[.00] per disclosure) was given to inventors in the top 10% of patents granted in the fiscal year as determined by the IP Division.
19. Upon information and belief, [] Defendant regularly promoted its Patent Program in a series of repeated communications heavily encouraging prospective participants, including [] Plaintiff, to submit Invention Disclosures through the Patent Program.
20. Efforts to encourage participation included, for example, presenting informational content and promoting "Invention Challenges" in which prospective inventors were further [incentivized] to submit ideas through the Patent Program.
21. In an article published by the World Intellectual Property Organization article about [] Defendant, an author noted that "All [Defendant] employees are encouraged to share their ideas[,]" and that [] Defendant's innovation strategy is "systematically communicated to all employees to ensure everyone is familiar with and works to support the company's innovation objectives." ....
22. To participate in the Patent Program and any Invention Challenges, [] Defendant required inventors to use a unique, company-designed record submission system called "Memotech."
23. Upon information and belief, the Memotech record system, which is maintained by [] Defendant, is designed to provide inventors with a digital organization and submission system for their inventions.
24. On or around July 2016, Plaintiff was introduced to an "Invention Challenge" promoted within the Patent Program that ran from [1 September] 2016 - [30 September] 2016, whereby [] Defendant provided additional prize incentives, such as cash, electronic tablets, and a watch, for participation in the Patent Program (the "September Invention Challenge").
25. [] Defendant's desire for [] Plaintiff's participation continued from there throughout his term of employment and beyond.
26. [] Defendant introduced the September Invention Challenge to [] Plaintiff via a Microsoft PowerPoint that outlined the challenge, the rules and regulations of the challenge, and the invention and patent filing process (the "September PowerPoint").
27. The September PowerPoint includes encouragement from [] Defendant that participating in the September Invention Challenge provided a positive, creative outlet outside of the rigors of regular activities within the scope of day to day employment.
28. [] Defendant also provided definitions specific to the September Invention Challenge for terms such as patent, invention, and invention disclosure.
29. Defendant defined "disclosure" as "a mechanism for employees to internally submit their inventions for patent consideration."
30. Additionally, the September PowerPoint showcased the mutual benefits of participation in the Patent Program for both a participant and [] Defendant, and highlighted the possibility of cash awards, career advancement and recognition, and "Master Inventor Status" (a recognition designated by [] Defendant).
31. An inventor could earn Master Inventor Status with [] Defendant based on achievement at a former employer OR the documentation of 20 career patents based on an annual review of Memotech records.
32. Specifically, within the September PowerPoint, [] Defendant notes that to achieve "Master Inventor Status," the inventor "[c]an count non-Lenovo assigned patents by Inventor's request."
33. Buried on the 5th slide of the September PowerPoint[] was a statement that [] Defendant would "get" (1) "rights to valuable ideas," (2) "leverage to use other company's intellectual property", [sic] and (3) "potential revenue from licensing, assignments, and etc."
34. Upon information and belief, Defendant attorneys were not only involved throughout every step of the Patent Program from "marketing" the program to implementation of each step and beyond, but the September PowerPoint and other promotional communications were presented to [] Plaintiff and other prospective inventors by Defendant representatives, including Defendant attorneys, without a recommendation for [] Plaintiff and other prospective inventors to seek their own legal representation.
35. The September PowerPoint offered information to inventors about how inventions and ideas are started, developed, and expanded.
36. It continues by providing inventors with an in-depth description about how to properly create an invention disclosure, including a sample invention disclosure where
[] Defendant highlights its desire that inventors look toward submitting ideas that might be implemented "in the function or manufacture of our competitors' products" with an implication that such ideas might lead to patents that could be "valuable" to [] Defendant.
37. Finally, the September PowerPoint provides information regarding the patent process from the invention idea to patent filing.
38. The September PowerPoint concludes with a list of names of "Master Inventors" throughout the world, as well as members of Defendant's IP Division as resources that Patent Program participants are encouraged to contact for guidance in the disclosure process.
39. After viewing the September Power[P]oint, Plaintiff decided to submit disclosures in the Patent Program.
40. Between approximately May 2016 and October 2017, Plaintiff submitted in excess of 45 disclosures, the majority of which the IP Division ultimately voted to submit for filing and thereby designated to an outside attorney for drafting and filing an application for patent.
41. After making Invention Disclosure submissions, [] Defendant informed [] Plaintiff that some qualifying awards are typically issued several weeks after signing paperwork and during the patent filing process.
42. Upon information and belief, the patent filing process often took place months to years after [] Plaintiff submitted his disclosures.
43. On or about October of 2017, while at least 20 of [] Plaintiff's Invention Disclosures were still under review or in the patent filing process, [] Plaintiff was laid off by [] Defendant.
44. At the end of his period of employment with Defendant, Plaintiff had only received awards for a fraction of
Invention Disclosure submissions that had reached qualifying milestones in the Patent Program review process, and is eligible for awards in excess of $50,000[.00] for Invention Disclosure submissions that have reached qualifying milestones in the Patent Program review process.
45. Upon [] Plaintiff's repeated inquiries regarding award status for milestone achievements of his invention Disclosures, [] Defendant expressed that [] Plaintiff must be an active employee to receive payment of Patent Program awards, despite allowing inclusion of non[-]active employee activities to qualify for participation in the Patent Program as indicated in the September PowerPoint.
46. Despite being denied awards for milestone achievements of invention Disclosures submitted by Defendant, Plaintiff was contacted as recently as late 2021 by Defendant's attorneys to sign paperwork relating to at least eight Invention Disclosures to assign his right, title, and interest of intellectual property in said Invention Disclosures to [] Defendant so that [] Defendant could complete the patent application filings for [them].
47. Although [] Defendant's attorneys have reached out to [] Plaintiff outside of his active employment, [] Plaintiff has been informed that he would not receive awards for milestone achievements of any of the Invention Disclosure submissions for which [] Defendant is seeking to submit patent applications.
VI. CAUSE[S] OF ACTION FIRST CAUSE OF ACTION (Constructive Fraud)
48. Plaintiff hereby incorporates paragraphs 1 - 47 by reference.
49. Plaintiff received an offer for employment from Defendant that did not include duties or compensation for participation in [] Defendant's voluntary Patent Program.
50. After [] Plaintiff started his employment with [] Defendant, [] Defendant heavily encouraged [] Plaintiff to participate in [] Defendant's voluntary Patent Program, a program that was created by [] Defendant to offer information, advice, and assistance from [] Defendant's attorneys and oilier representatives to inventor participants for the purpose of soliciting Invention Disclosures for review by [] Defendant's attorneys for the possibility of pursuing patent protection for the Invention Disclosure subject matter locally and abroad.
51. Participation in the program required inventor participants, including [] Plaintiff, to disclose and relinquish control of proprietary and confidential information without receiving anything of value from [] Defendant in exchange. Specifically, [] Defendant effectively hijacked [] Plaintiff's opportunity to pursue intellectual property ownership rights directly and did so without recommending that [] Plaintiff consult with his own legal representative and without providing [] Plaintiff any information or agreements relating to exercising joint rights, licensing rights, and/or assignments of rights before participation in the Patent Program. Additionally, any prospective cash awards were discretionary, non guaranteed, and extremely small.
52. Upon information and belief, [] Defendant (I) used attorney representatives to create, promote, and describe the Patent Program to its employees whom [] Defendant knew and had reason to know were unrepresented as individuals with respect to intellectual property and employment rights, (2) did not explain that [] Defendant attorneys did not represent Patent Program participants in their individual capacities and/or with respect to their individual intellectual property rights, (3) did not explain the rights and obligations of either [] Defendant or Patent Program participants-any indication that [] Defendant would receive "rights" to a participant['s] valuable ideas was made without providing a description of the rights contemplated, time period when transfer was expected to
occur, or consideration for transfer, and (4) did not recommend that Patent Program participants discuss participation in the voluntary Patent Program with attorneys of their own.
53. Representatives for [] Defendant expressly told [] Plaintiff on multiple occasions not to use company time to participate in the voluntary Patent Program.
54. Between approximately mid 2016-2017, [] Plaintiff submitted multiple Invention Disclosures through [] Defendant's voluntary Patent Program, several of which were approved for patent application drafting and filing by Defendant representatives.
55. On multiple occasions, upon [] Defendant's designation of an Invention Disclosure for application drafting and filing, a Defendant attorney contacted the unrepresented Plaintiff to sign paperwork assigning all right, interest, and title to Defendant.
56. Throughout the entire Patent Program process, [] Defendant, [] Defendant's attorneys, and [] Defendant's agents exerted complete discretion to reject or approve an Invention Disclosure for further pursuit and to designate [] Defendant to receive the rights, title, and interest to [] Plaintiff's disclosures.
57. In addition to exerting complete control over the Patent Program process, [] Defendants encouraged [] Plaintiff to consult with [] Defendant, [] Defendant's attorneys, and [] Defendant's agents throughout the Patent Program process.
58. [] Defendant's actions in effectuating the Patent Program created a relationship of trust and confidence between [] Defendant through [] Defendant's attorneys and [] Plaintiff by offering and providing free legal advice, information, and assistance to participants, including [] Plaintiff, throughout the entire Invention Disclosure, Patent Program, and patent application filing process.
59. Furthermore, [] Defendant's actions in effectuating the Patent Program created a relationship and environment of trust and confidence between [] Defendant and [] Plaintiff when [] Defendant, among other things, (1) used company attorneys to consult with the umepresented Plaintiff regarding [] Plaintiff's legal rights and interests in potential confidential disclosures and valuable intellectual property, (2) provided information and advice regarding the patent process to [] Plaintiff, (3) made references to acknowledging and recognizing [] Plaintiff's inventor status, (4) strongly encouraged [] Plaintiff's participation in the Patent Program, (5) alluded to career advancement opportunities through voluntary participation in the Patent Program, (6) offered cash and prize incentives, and (7) offered opportunities to network with and engage with accomplished Intellectual Property attorneys, inventors, and people of influence in the industry.
60. [] Defendant violated its trust and confidence with [] Plaintiff by seeking to unfairly and dishonestly acquire the right, title, and interest in [] Plaintiff's intellectual property under the guise of, among other things, (1) assisting [] Plaintiff, (2) claiming to provide [] Plaintiff an opportunity to realize rights in intellectual property he would not otherwise have, and (3) creating the false impression that participating in the Patent Program could positively influence [] Plaintiff's employment opportunities and/or provide advancement opportunities with Defendant.
61. [] Defendant and [] Defendant['s] attorneys each used their respective positions of trust to their own benefits by, among other things, submitting on [] Defendant's behalf valuable patent applications, and in some cases receiving patent grants, for unique, confidential disclosures and rights from [] Plaintiff without providing anything of value in exchange.
62. [] Defendant's actions have caused [] Plaintiff damages in excess of $25,000[.00] in an amount to be determined at trial.
SECOND CAUSE OF ACTION (Unfair &Deceptive Trade Practices, N.C. G.S. § 75.1-1)
63. Plaintiff hereby incorporates paragraphs 1 - 47 by reference.
64. Defendant acted deceptively through actions of soliciting Invention Disclosure submissions and seeking valuable patent rights from participants of its Patent Program, targeting participants who were uninformed and unfamiliar with the patent process. Defendants used their position of trust to provide exclusive guidance and resources related to the patent process after causing participants to feel pressured to participate in the Patent Program and without expressly stating te1ms of participation.
65. Defendant acted deceptively in offering guidance, advice, and support from Defendant's own Intellectual Property attorneys and other agents of [] Defendant with the intention of benefiting from participants' disclosure submissions, without advising participants to seek outside counsel to protect their interests.
66. The unfair and deceptive acts are in or affect commerce due to the nature of valuable patent rights that can be obtained and utilized by [] Defendant to benefit financially, both nationally and internationally via the business of [] Defendant, which involves worldwide computer sales, parts, services, and software sale.
67. [] Defendant acted deceptively by facilitating the filing of multiple patent applications from [] Plaintiff's disclosure submissions, while simultaneously engaging in acts reserved for owners of all right, interest, and title to the patents without providing compensation to [] Plaintiff.
68. [] Defendant's actions have caused [] Plaintiff damages in excess of $25,000[.00] in an amount to be determined at trial.
THIRD CAUSE OF ACTION (Unjust Enrichment)
69. Plaintiff hereby incorporates paragraphs 1 - 47 by reference.
70. Plaintiff conferred the benefit of measurable intellectual property rights on [] Defendant.
71. [] Defendant consciously accepted the benefit conferred upon it and pursued patent application submissions at its sole discretion.
72. Defendant has knowingly benefited from engaging in acts reserved for an owner of right, interest, and title to [] Plaintiff's intellectual property rights without providing compensation to [] Plaintiff.
73. Plaintiff's participation in and transfer of any rights to his intellectual property were not intended to be gratuitous and [] Plaintiff expected, at minimum, awards as described in the Patent Program promotional materials[.]
74. [] Defendant's actions have caused [] Plaintiff damages in excess of $25,000[.00] in an amount to be determined at trial.
FOURTH CAUSE OF ACTION (Wage & Hour Act, N.C. G.S. § 95-25.7)
75. Plaintiff hereby incorporates paragraphs 1 - 47 by reference.
76. During the course of his employment with Defendant, from approximately March 2016 - October 2017, Plaintiff submitted multiple Invention Disclosures via a Patent Program created by Defendant, to Defendant, that were
deemed suitable by Defendant to file as patent applications.
77. Defendant advertised via Microsoft PowerPoint Presentations that participants would be compensated financially for each filed patent application and each issued patent.
78. During the course of his employment with Defendant, Plaintiff submitted multiple qualifying disclosures[] for which compensation has not been paid to [] Plaintiff.
79. After [] Plaintiff submitted said disclosures, [] Plaintiff was laid off by [] Defendant on or about October 2017.
80. [] Defendant has, up to present, refused to compensate Plaintiff for qualifying Invention Disclosure milestones, claiming that compensation is only paid to employees who are active at the time of accrual.
81. Defendant's actions violated N.C. G.S. § 95-25.7 by refusing to compensate Plaintiff within the statu[torily] allotted time period of "The first regular payday after the amount becomes calculable when separation occurs."
82. [] Defendant's actions have caused [] Plaintiff damages in excess of $25,000[.00] in an amount to be determined at trial.
On 22 April 2022, Defendant moved to dismiss. Defendant argued, in relevant part, that "[a]ll claims should be dismissed under Rule 12(b)(6) because Plaintiff waived and released those claims by executing a December 2017 General Release in exchange for severance payments"; "[t]he [s]econd, [t]hird, and [f]ourth [c]laims (unfair and deceptive trade practices, unjust enrichment, and . . . North Carolina Wage &Hour Act) should be dismissed under Rule 12(b)(6) because they violate the applicable statutes of limitations"; "[t]he [f]irst [c]laim (constructive fraud) should also be dismissed because Plaintiff fails to allege facts sufficient to establish a fiduciary relationship existed between him and Lenovo"; "[t]he [s]econd [c]laim (unfair and deceptive trade practices) should also be dismissed because it involves an intra-company employer-employee dispute, which North Carolina courts have repeatedly held are not 'in or affecting commerce[]'"; "[t]he [t]hird [c]laim (unjust enrichment) should also be dismissed because Plaintiff concedes there was an express contractual relationship governing the same subject matter"; and "[t]he [f]ourth [c]laim (violation of the North Carolina Wage and Hour Act)[] should be dismissed because the terms of Lenovo's Patent Program provide that continued employment is a condition of receiving discretionary bonuses." Attached to Defendant's motion to dismiss were an Agreement Regarding Confidential Information, Intellectual Property and Other Matters reviewed and agreed to by Plaintiff; a description of the Patent Program by Lenovo's human resources department; and the General Release discussed in the motion, signed by Plaintiff.
In supplemental briefings related to the motion to dismiss, Defendant also argued that the trial court could convert the motion to dismiss into a motion for judgment on the pleadings under Rule 12(c).
By an order entered 1 June 2022, the trial court dismissed all of Plaintiff's claims "in accordance with Rule 12(b)(6) and Rule 12(c)[.]"
ANALYSIS
On appeal, Plaintiff argues the bases outlined in Defendant's Motion to Dismiss were inadequate to justify dismissal of any of his claims under either Rule 12(b)(6) or Rule 12(c). At the threshold, he argues (A) dismissal was improper because the trial court considered documents outside the scope of his complaint and (B) judgment on the pleadings was improper because material facts were in dispute. He then goes on to argue the claims for (C) constructive fraud, (D) UDTP, (E) unjust enrichment, and (F) violations of the Wage &Hour Act were all otherwise sufficient to survive a motion to dismiss. We review a trial court's dismissal of a plaintiff's claims under both rules de novo. See Bridges v. Parrish, 366 N.C. 539, 541 (2013) ("Our review of the grant of a motion to dismiss under Rule 12(b)(6) of the North Carolina Rules of Civil Procedure is de novo."); Carpenter v. Carpenter, 189 N.C.App. 755, 757 (2008) ("This Court reviews a trial court's grant of a motion for judgment on the pleadings de novo.").
A. Scope of the Complaint
Plaintiff first argues the trial court inappropriately considered documents outside the scope of the complaint in ruling on Defendant's motion to dismiss. In particular, Plaintiff argues the trial court should not have considered the copy of the General Release attached to Defendant's motion. Defendant, meanwhile, argues the General Release was not only appropriately within the trial court's consideration in ruling on the motion, but also that the General Release independently justified dismissal of all of Plaintiff's claims, as he had waived all claims in the document.
"In ruling on a motion to dismiss, a court properly may consider only evidence contained in or asserted in the pleadings." Jacobs v. Royal Ins. Co. of Am., 128 N.C.App. 528, 530 (1998). "As such, when considering a Rule 12(b)(6) motion, the trial court is limited to reviewing the allegations made in the complaint." Blue v. Bhiro, 381 N.C. 1, 5 (2022). "If, however, documents are attached to and incorporated within a complaint, they become part of the complaint. They may, therefore, be considered in connection with a Rule 12(b)(6) or 12(c) motion without converting it into a motion for summary judgment." Bank of Am., N.A. v. Rice, 244 N.C.App. 358, 370 (2015).
This is due to the fact that "[t]he obvious purpose of . . . Rule 12(b) is to preclude any unfairness resulting from surprise when an adversary introduces extraneous material on a Rule 12(b)(6) motion, and to allow a party a reasonable time in which to produce materials to rebut an opponent's evidence once the motion is expanded to include matters beyond those contained in the pleadings."Id. (quoting Coley v. N.C. Nat. Bank, 41 N.C.App. 121, 126 (1979)). Thus, if a trial court properly considers an attached or incorporated document when ruling on a motion to dismiss, "the actual content of the documents controls, not the allegations contained in the pleadings." Schlieper v. Johnson, 195 N.C.App. 257, 263 (2009).
We have held, in the most archetypal instance of a document incorporated into a complaint, that "a trial court's consideration of a contract which is the subject matter of an action does not expand the scope of a Rule 12(b)(6) hearing and does not create justifiable surprise in the nonmoving party." Oberlin Cap., L.P. v. Slavin, 147 N.C.App. 52, 60 (2001). We have also held that consideration of a document by the trial court when ruling on a motion for summary judgment is appropriate where the "documents were the subjects of some of [the] plaintiffs' claims and [the] plaintiffs specifically referred to the documents in their complaint[.]" Robertson v. Boyd, 88 N.C.App. 437, 441 (1988).
However, where a plaintiff simply refers to a document that was not the subject of his or her action, and the defendant attaches that document or an affidavit concerning that document to support a Rule 12(b)(6) or Rule 12(c) motion, the trial court's consideration of that document converts the motion into one for summary judgment.Holton v. Holton, 258 N.C.App. 408, 419 (2018).
Here, while Plaintiff arguably discussed the terms of his employment in his complaint by reference to his "job duties," none of the relevant documents attached to Defendant's motion to dismiss were "the subject of [Plaintiff's] action" as framed in the complaint itself, id., nor were they incorporated in or attached to the complaint. Indeed, the only documents that were attached to Plaintiff's complaint were a selection of articles generally discussing Lenovo's patent program and its desired industry impact. Accordingly, none of the documents Defendant references were properly before the trial court on a motion to dismiss, and we conduct our remaining assessment of the trial court's motion in light of only the allegations set forth in the complaint.
B. Judgment on the Pleadings under Rule 12(c)
Plaintiff next argues the trial court erred in dismissing his claims "in accordance with . . . Rule 12(c)" because judgment on the pleadings was inappropriate where Lenovo had denied material allegations in his complaint. In a rule 12(c) motion, "[a]s in a 12(b)(6) motion, our Court must accept the allegations in [the plaintiff's] complaint as true." Fisher v. Town of Nags Head, 220 N.C.App. 478, 480 (marks omitted), appeal dismissed, 336 N.C. 244 (2012). "A motion for judgment on the pleadings is the proper procedure when all the material allegations of fact are admitted in the pleadings and only questions of law remain." Ragsdale v. Kennedy, 286 N.C. 130, 137 (1974). Importantly, "[w]hen the pleadings do not resolve all the factual issues, judgment on the pleadings is generally inappropriate." Id.; see also Garrett v. Winfree, 120 N.C.App. 689, 691 (1995) ("Judgment on the pleadings is improper where the pleadings do not resolve all the factual issues.").
Notwithstanding the inappropriateness of judgment on the pleadings where outstanding determinative factual issues exist, Plaintiff's position-that judgment on the pleadings requires the movant to have admitted, for all purposes, all material allegations of fact-is inconsistent with longstanding caselaw. Instead, a motion for judgment on the pleadings requires the absence of a "material issue of fact ...." Com. Credit Equip. Corp. v. Thompson, 48 N.C.App. 594, 598 (1980); cf. also Mace v. Utley, 275 N.C.App. 93, 98 (2020) ("A genuine issue of material fact is one in which the facts alleged are such as to constitute a legal defense or are of such nature as to affect the result of the action, or if the resolution of the issue is so essential that the party against whom it is resolved may not prevail."). Indeed, both we and our Supreme Court have described moving for judgment on the pleadings as having the effect of limited admission:
When a party moves for judgment on the pleadings, he admits these two things for the purpose of his motion, namely: (1) The truth of all well-pleaded facts in the pleading of his adversary, together with all fair inferences to be drawn from such facts; and (2) the untruth of his own allegations in so far as they are controverted by the pleading of his adversary.Gammon v. Clark, 25 N.C.App. 670, 671 (1975) (citing Erickson v. Starling, 235 N.C. 643, 656 (1952)). "These admissions are made only for the purpose of procuring a judgment in the movant's favor." Erickson, 235 N.C. at 656.
If it were truly the case that all material facts must have been admitted prior to a Rule 12(c) motion for judgment on the pleadings to be proper, then it would be unnecessary to specify, as we and our Supreme Court both have, that the movant makes limited admissions for purposes of the motion. Thus, the trial court's decision to dismiss the case through the vehicle of Rule 12(c) was not itself error.
Moreover, unlike a motion to dismiss under Rule 12(b)(6), our Supreme Court has specified that an exhibit "attached to the answer, and made a part thereof, may be considered in passing upon a judgment on the pleadings." Sale v. Johnson, 258 N.C. 749, 758 (1963). Defendant attached several. While we find it unnecessary to consider these exhibits with respect to Plaintiff's Constructive Fraud, UDTP, and unjust enrichment claims-all of which were, for the reasons discussed below, properly dismissed under Rule 12(b)(6) and 12(c) in light of only the allegations in Plaintiff's complaint-we consider these exhibits for purposes of determining whether any Wage &Hour Act claims not properly dismissed under Rule 12(b)(6) were nonetheless properly dismissed under Rule 12(c).
C. Constructive Fraud
Plaintiff next argues the trial court erred in dismissing his constructive fraud claim.
In order to maintain a claim for constructive fraud, [a plaintiff] must show that [he] and [the defendant] were in a relation of trust and confidence which led up to and surrounded the consummation of the transaction in which defendant is alleged to have taken advantage of his position of trust to the hurt of [the] plaintiff. Constructive fraud differs from actual fraud in that it is based on a confidential relationship rather than a specific misrepresentation. Implicit in the requirement that a defendant take advantage of his position of trust to the hurt of [the] plaintiff is the notion that the defendant must seek his own advantage in the transaction; that is, the defendant must seek to benefit himself.Barger v. McCoy Hillard &Parks, 346 N.C. 650, 666 (1997) (marks and citations omitted). Put differently, the elements of constructive fraud are that the defendant "(1) owe[d] [the] plaintiff a fiduciary duty; (2) breached this fiduciary duty; and (3) sought to benefit himself in the transaction." Crumley & Assocs., P.C. v. Charles Peed & Assocs., P.A., 219 N.C.App. 615, 620 (2012).
Here, the fiduciary duty Plaintiff argues supports the first element of constructive fraud was between himself and Lenovo's attorneys. However, our caselaw and the facts alleged in Plaintiff's complaint support no such conclusion. It is well-established in our jurisdiction that "'the relation of employer and employee is not one of those regarded as confidential.'" Dalton v. Camp, 353 N.C. 647, 651 (2001) (quoting King v. Atlantic Coast Line R.R. Co., 157 N.C. 44 (1911)). Furthermore, where an attorney is in a client's employ, "[t]he attorney acts as an agent for the client." Long v. Joyner, 155 N.C.App. 129, 135 (2002), disc. rev. denied, 356 N.C. 673 (2003); see also Dunkley v. Shoemate, 350 N.C. 573, 577 (1999) ("[A]n attorney-client relationship is based upon principles of agency[.]"). Taking these principles together in combination with the demonstrable cognizance in Plaintiff's complaint that the attorneys with whom he interacted were employed by Lenovo, [ we hold that this claim was properly dismissed, as Plaintiff cannot establish a fiduciary duty.
Plaintiff refers to the attorneys repeatedly as "Defendant's attorneys."
D. UDTP
Plaintiff next argues the trial court erred in dismissing his UDTP claim. Defendant, in addition to arguing Plaintiff failed to establish the elements of a UDTP claim, also argues this claim was properly dismissed under the applicable statute of limitations. As we agree the claim was time-barred and therefore properly dismissed on that basis, we need not address whether the elements of the claim were properly alleged.
Neither party disputes that UDTPA claims are subject to a four-year statute of limitations, N.C. G.S. § 75-16.2 (2022), and Plaintiff filed his complaint on 9 February 2022. In order to overcome this time bar, Plaintiff argues that Lenovo's actions constitute a "continuing wrong" consisting of "violative acts . . . up to and through the present[.]" Marzec v. Nye, 203 N.C.App. 88, 94 (2010) ("Under the continuing wrong doctrine, the statute of limitations does not start running until the violative act ceases."). However, all of Plaintiff's arguments concerning this allegedly continuing wrong relate to Lenovo's continuation through the patent filing process with respect to rights already assigned to it during or before 2017. As "[a] continuing violation is occasioned by continual unlawful acts, not by continual ill effects from an original violation[,]" Plaintiff has not established that Lenovo's acts constituted a continuing wrong. Williams v. Blue Cross Blue Shield of N. Carolina, 357 N.C. 170, 179 (2003). The trial court therefore correctly ruled that his UDTPA claim was time-barred and dismissed it under Rule 12(b)(6).
E. Unjust Enrichment
Next, we address Plaintiff's unjust enrichment claim. As with the previous claim, both the sufficiency of the pleading to establish the essential elements and the timeliness of the claim are contested on appeal; however, as we hold the claim was untimely, we need not address whether the elements of the claim had been alleged.
Plaintiff concedes that unjust enrichment claims are ordinarily subject to a three-year statute of limitations under N.C. G.S. § 1-52(1). See N.C. G.S. § 1-52(1) (2022). However, he argues that, under Adams v. Moore, 96 N.C.App. 359 (1989), his claim should actually be subject to a ten-year statute of limitations as it is predicated on a breach of fiduciary duty. Even if we accepted Adams as standing for such a broad claim, for the reasons discussed above, Plaintiff has failed to establish that a fiduciary relationship existed between himself and Defendant. See supra Part C. Accordingly, the trial court properly dismissed this claim as time-barred under N.C. G.S. § 1-52(1).
F. Wage &Hour Act
Finally, Plaintiff argues the trial court improperly dismissed his claim for Defendant's alleged violation of the Wage &Hour Act, which Defendant once again argues was properly dismissed both for reasons of timeliness and for failure to establish the elements of the claim. Under the relevant provision of the Wage &Hour Act, N.C. G.S. § 95-25.6, "[e]very employer shall pay every employee all wages and tips accruing to the employee on the regular payday. Pay periods may be daily, weekly, bi-weekly, semi-monthly, or monthly. Wages based upon bonuses, commissions, or other forms of calculation may be paid as infrequently as annually if prescribed in advance." N.C. G.S. § 95-25.6 (2022). Moreover,
[a]ny employer who violates the provisions of [ N.C. G.S. §] 95-25.3 (Minimum Wage), [ N.C. G.S. §] 95-25.4 (Overtime), or [ N.C. G.S. §§] 95-25.6 through 95-25.12 (Wage Payment) shall be liable to the employee or employees affected in the amount of their unpaid minimum wages, their unpaid overtime compensation, or their unpaid amounts due under [ N.C. G.S. §] 95-25.6 through 95-25.12, as the case
may be, plus interest at the legal rate set forth in [ N.C. G.S. §] 24-1, from the date each amount first came due.N.C. G.S. § 95-25.22(a) (2022).
Plaintiff first argues the trial court erred in dismissing his claim because Defendant
represent[ed] that participants [in the patent program] would be compensated financially for each related patent application filed and each pending patent issuing therefrom [] as a vested benefit, to be paid if and when Lenovo exercised its discretionary option to submit filings to the patent office and thereafter upon issuance of a patent by the USPTO.
Plaintiff's complaint stated the following, in relevant part, of the patent program: "Defendant represented that Patent Program participants could be eligible to receive standardized awards if, in [] Defendant's sole discretion, disclosures reached specific milestones in [] Defendant's review process." Plaintiff did not attach any documentation setting forth the exact terms of the patent program to his complaint.
Defendant argues the patent program's terms, as found on Lenovo's website, establish that any compensation did not constitute "earned wages" for purposes of the Wage &Hour Act. However, all of its arguments require reference to sources outside Plaintiff's complaint. By the terms communicated in Plaintiff's complaint, Plaintiff's Wage &Hour Act claim contains all necessary elements, as program participants were alleged to be entitled to awards in the event participants reached specific milestones in the review process. The trial court erred in dismissing Plaintiff's Wage &Hour Act claim under Rule 12(b)(6) on this basis.
As an alternative basis to uphold the dismissal of Plaintiff's claims, Defendant argues the applicable statute of limitations bars Plaintiff's claims. See N.C. G.S. § 95-25.22(f) (2022) ("Actions under this section must be brought within two years ...."). Specifically, Defendant argues that, although some of the qualifying milestones of the patent program may have occurred within two years of the suit being filed, the statute of limitations for all of the payments began to toll at the time the first payment would have been owed to Plaintiff under the program. However, the only binding authority Defendant cites for this proposition is the general notion that "[t]he statute begins to run on the date the promise is broken." Kornegay v. Aspen Asset Grp., LLC, 204 N.C.App. 213, 233 (2010). From this, it reasons that every payment under the patent program was a component of a singular promise, the first violation of which began the tolling of all related claims.
Assuming, arguendo, that some formulation of the patent program could have resulted in its interpretation as a singular promise, the trial court lacked the requisite factual information about the program to make such a determination; Plaintiff's complaint contained insufficient information about the program for the trial court to have made such a specific determination about the nature of the promise, if any. As the exact terms of the patent program were not before the trial court for purposes of the 12(b)(6) motion, it was not in a position to determine, without more, whether Plaintiff's Wage &Hour Act claims were barred by statute of limitations on this basis.
However, our analysis is not yet complete, as we must also consider whether the trial court correctly dismissed the claims under Rule 12(c) in light of the additional exhibits attached to Defendant's answer. We hold that it did. While Plaintiff attached a number of exhibits discussing the patent program to his complaint, the exhibits were comprised primarily of articles discussing the existence and aims of the patent program rather than its terms. Defendant, meanwhile, attached, inter alia, a copy of a General Release signed by Plaintiff in December of 2017 which stated, in relevant part, that Plaintiff waived "any and all [c]laims for wages and benefits" pursuant to a severance agreement with Defendant. Thus, while dismissal under Rule 12(b)(6) was inappropriate with respect to at least some of Plaintiff's Wage &Hour Act claims, the broader range of documents available to the trial court under Rule 12(c) rendered judgment on the pleadings appropriate.
CONCLUSION
The trial court properly dismissed Plaintiff's claims for constructive fraud, UDTP, and unjust enrichment. Moreover, while the trial court would not have been able to determine from the face of Plaintiff's complaint whether dismissal of all of Plaintiff's Wage &Hour Act claims was appropriate under Rule 12(b)(6), Defendant's inclusion of a General Release indicating such claims had been waived in its responsive pleadings justified judgment on the pleadings under Rule 12(c). Accordingly, we affirm the trial court's order as modified.
MODIFIED AND AFFIRMED.
Judge HAMPSON concurs.
Judge GRIFFIN concurs in the result.
Report per Rule 30(e).