Opinion
No. COA12–1414.
2013-07-16
Edith R. SALMONY, Guardian of the Estate of Mary Elizabeth Edwards, Incompetent; GERALDINE E. EDWARDS and MARCUS A. EDWARDS, SR ., parents and Guardian of the Person of Mary Elizabeth Edwards, Incompetent, Plaintiffs, v. BANK OF AMERICA CORPORATION, a/k/a Bank of America, N.A., formerly known as NationsBank Corporation, also formerly known as BankAmerica Corporation, also formerly known as Nations Bank of North Carolina, N.A., and also formerly known as NCNB Corporation, Defendant.
Edith R. Salmony for Plaintiffs. McGuireWoods, LLP, by Amy Reeder Worley, Monica E. Webb, and Michael Easley, Jr., for Defendant.
Appeal by Plaintiffs from orders entered 27 September 2011 and 8 May 2012 by Judge Paul C. Ridgeway in Wake County Superior Court. Heard in the Court of Appeals 23 April 2013. Edith R. Salmony for Plaintiffs. McGuireWoods, LLP, by Amy Reeder Worley, Monica E. Webb, and Michael Easley, Jr., for Defendant.
STEPHENS, Judge.
Procedural History and Factual Background
This case arises out of the guardianship of the estate of Mary Elizabeth Edwards (“the Estate”). On 30 July 2010, Ms. Edith R. Salmony (“Salmony”) and Mary's natural parents (“the Parents”)—collectively, “Plaintiffs”—filed a complaint in Wake County Superior Court against Bank of America Corporation (“BOA” or “Defendant”) on behalf of the Estate, alleging (1) negligence, (2) breach of fiduciary duty, and (3) unfair and deceptive trade practices. In support of those claims, Plaintiffs pled the following:
As a part of their claim for breach of fiduciary duty, Plaintiffs include an allegation of constructive fraud, noting in paragraph 33 of their complaint that “BOA's failures with respect to [Mary] and the [Parents] constitute breaches of BOA's fiduciary relationships and constructive fraud.” (Emphasis added). This is the only time constructive fraud is mentioned in the complaint.
On 12 May 1992, the Parents were appointed guardians of Mary's person. That same day, Nations Bank of North Carolina, N.A. (“Nations Bank”)—now Bank of America, N.A. (“BANA”)—was appointed guardian of the Estate. The Estate was established with funds from a civil settlement resulting from injuries Mary sustained during a surgery. Those injuries “resulted in neurological impairment causing [Mary] to be rendered paraplegic and unable to learn to read or write.” BOA was responsible for managing the Estate, which had a beginning market value of $899,857.64. At some point,
Plaintiffs refer to Nations Bank, BANA, and BOA interchangeably. While BOA is neither the same company as Nations Bank and BANA nor a successor-in-interest of either company, we duplicate Plaintiffs' allegations here for the purposes of fully evaluating their appeal.
BOA transferred ... management of the Estate from its Raleigh office to an Atlanta office without permission from or notification to [the court or the Parents] and ... none of the Atlanta officers or managers of the [E]state ever [met] personally with [either Mary or the Parents].
In 2006, Mary's mother and guardian, Ms. Geraldine Edwards (“Ms.Edwards”), “petitioned the [c]ourt for removal of BOA as the [g]uardian of [the Estate],” asserting that the company (1) was “not responsive to matters important to the Estate and to the well-being of [Mary],” (2) had charged “significant hidden fees that were unfair,” and (3) had “assigned management of the [E]state to inappropriate trust officers and employees....” Defendant was removed as guardian of the Estate during a hearing before the Wake County Clerk of Court on 5 December 2006. The court also declared Mary—who was then twenty-seven years old—to be “an incompetent” and, Plaintiffs allege, determined that BOA had “failed to notice her majority ... for more than nine years[,] [failed] to properly attend to the matter of submitting a final accounting to close the [ ]Estate,” and, thus, “acted as [g] uardian without qualification or [c] ourt authority for nine years.” At the same hearing, the court appointed Salmony, an attorney, as the Estate's new guardian.
BOA failed to turn over assets of the Estate in a “timely or organized” manner, and Plaintiffs were “not able to acknowledge receipt of the assets ... until mid-July 2007.” It took BOA “many months” to turn over the liquid assets of the Estate, which had allegedly depreciated to approximately $443,273.93. In August of 2007, Plaintiffs also discovered that “BOA had cancelled the homeowners insurance on [Mary's] home, the largest asset of the Estate, without informing Plaintiff[s] of the same when title [was transferred].” Further, Plaintiffs learned in September of 2007 “that ... BOA withheld ... sums [of money] from the monthly [c]ourt[-]ordered payments to the Parent[s] ... and diminished the principal available for growth of the Estate and the funds for [Mary's] care.”
Defendant filed its answer on 1 October 2010, admitting that “BOA, ... formerly known as [Nations Bank], was duly appointed as [g]uardian of the Estate” and that “BOA was removed as [g]uardian of the Estate” on 5 December 2006. BOA denied Plaintiffs' material factual allegations and any accompanying liability. BOA also asserted that Ms. Edwards's petition to remove BOA as guardian of the Estate “was prompted, [ inter alia ], by BOA's refusal to use [Mary's] assets to fund a vacation requested by [Ms. Edwards]” and that Ms. Edwards made a sworn statement that Mary's assets were valued at $755,000.00 when she sought to remove BOA as guardian in 2006.
On 9 September 2011, BOA filed a motion to dismiss Plaintiffs' complaint for failure to state a claim. The trial court granted that motion as to Plaintiffs' first and second claims for relief—breach of fiduciary duty and negligence—on 27 September 2011, concluding that those claims were barred by the applicable statutes of limitations. The court also granted Defendant's motion as to any claim Plaintiff asserted for constructive fraud, “find[ing] as a matter of law that the pleadings do not assert a claim based on constructive fraud ... because the pleadings, in a light most favorable to [Plaintiffs], do not assert that ... Defendant took advantage of its position of trust and confidence to hurt [Plaintiffs] or sought to benefit itself.” In addition, the court denied BOA's motion to dismiss with regard to Plaintiffs' third claim for relief—unfair and deceptive trade practices. Lastly, the trial court denied, “without prejudice to further consideration,” Defendant's motion to dismiss all three claims as to BOA's newly raised argument that it was not, in fact, a proper party to the action. In denying BOA's motion regarding its status as a proper party to the action, the trial court noted that it was “unable to resolve [the] issue on the pleadings,” but would allow further consideration of the matter “upon presentation of sufficient competent evidence.”
On 17 January 2012, Plaintiffs moved for summary judgment against BOA as to their remaining claim of unfair and deceptive trade practices. BOA responded on 13 April 2012 with two motions: the first for summary judgment on grounds that it was not the proper party to the case and the second to amend its answer to Plaintiffs' original complaint to reflect the fact that it was not a proper party to this case. In its second motion, BOA stated it had incorrectly admitted that it was appointed guardian of the Estate because, through no fault of its own, counsel for BOA was not able to obtain a copy of the guardianship file before its answer was due.
After a hearing on the parties' motions, the trial court denied Plaintiffs' motion for summary judgment and granted BOA's motions on 8 May 2012, allowing Defendant to amend its original answer to conform with the evidence and entering summary judgment in BOA's favor. On 4 June 2012, Plaintiffs filed notice of appeal from the trial court's 27 September 2011 and 8 May 2012 orders.
Discussion
On appeal, Plaintiffs assert that the trial court erred in (1) granting Defendant's motions for summary judgment, (2) denying Plaintiffs' motion for summary judgment, and (3) granting Defendant's Rule 12(b)(6) motion to dismiss. We affirm.
I. Motion to Strike
As a preliminary matter, we address Defendant's motion to strike Plaintiffs' reply brief. Generally, “[n]o reply brief will be received or considered by the court[.]” N.C.R.App. P. 28(h). However, when the appellee (here, Defendant) presents “new or additional issues” in its brief, the appellant (here, Plaintiffs) may timely file a reply brief. N.C.R.App. P. 28(h)(2). An appellee's brief presents new or additional issues when those issues do not “arise naturally and logically from the record and question presented.” Newsome v. N.C. State Bd. of Elections, 105 N.C.App. 499, 504, 415 S.E.2d 201, 203–04 (1992).
In response to Defendant's motion to strike, Plaintiffs assert that their reply brief is justified because Defendant's discussion of the validity of its motion to amend is a “new or additional issue,” which “[did] not arise naturally and logically from the questions or issues presented on appeal by Plaintiffs.” This is an incomplete statement of the rule articulated in Newsome. There we noted that new and additional issues sufficient to warrant review of a reply brief are present when they do not arise naturally and logically “from the record and question[s] presented” on appeal. Id. (emphasis added).
In its motion to strike, Defendant points out that Plaintiffs discussed the motion to amend in their principal brief on two separate occasions. In both instances, Plaintiffs made the point that “the proposed [a]mended [a]nswer does not rise above mere denial[s] ... [and] should not have been considered as evidence [in the summary judgment hearing].” Both statements are made in the context of Plaintiffs' argument that the trial court erred in granting summary judgment in Defendant's favor.
The validity of Defendant's motion to amend was also discussed at length during the summary judgment hearing. Plaintiffs were aware that it was an issue at the hearing and, as they note in their response to Defendant's motion to strike, explicitly refrained from appealing that issue to this Court. Accordingly, the validity of the motion to amend is not before this Court. Defendant's ad hoc discussion of that motion in its brief arose naturally and logically from the record on appeal and from the issues presented in Plaintiffs' brief; it is not a new or additional issue. Therefore, we grant Defendant's motion to strike.
We note, however, that Plaintiffs' second reply brief, submitted 17 April 2013, is properly before this Court under Rule 28(h)(3) of the North Carolina Rules of Appellate Procedure. SeeN.C.R.App. P. 28(h)(3), amended byN.C.R.App. P. 28(h) (15 April 2013).
II. The Parties' Motions for Summary Judgment
We review de novo a trial court's order on motions for summary judgment. In re Will of Jones, 362 N.C. 569, 573, 669 S .E.2d 572, 576 (2008) (citation omitted). Summary judgment is only appropriate when the record shows that there is no genuine issue of material fact and any party is entitled to judgment as a matter of law. Id. (citation omitted). On appeal, Plaintiffs contend that the trial court erred in denying their motion for summary judgment and in granting Defendant's motion for summary judgment on their claim of unfair and deceptive trade practices. We disagree.
Defendant contends that it is not a proper party to this action because it “is a holding company not authorized to operate as a bank and not authorized to act as a guardian of [the E]state.” As evidence of that assertion, Defendant presented two pertinent documents to the trial court. The first document is the affidavit of Ms. Elizabeth A. Pryor (“Pryor”), vice president and assistant secretary of BOA, which contained testimony that BANA is the “sole legal successor” to the original guardian of the Estate. Pryor testified that, while BANA is a “wholly [ ] owned indirect subsidiary of [BOA],” a Delaware corporation,
.... [BOA] is not the [g] uardian of [the Estate] because [it] is neither the legal successor to the [o] riginal [g] uardian, nor is [it] authorized by any ... law ... to exercise trust or guardianship powers.
.... By contrast, BANA is a national banking association organized under federal law [and was] the sole [g] uardian of the [Estate.]
The second document is an e-mail between counsel for the parties. Therein counsel for Plaintiffs asserted that “there is no confusion about the identity of the defendant or that it was properly served,” arguing that BOA is liable for BANA's actions as its parent corporation.
Under N.C. Gen.Stat. § 35A–1213(c), as Defendant notes in its brief, “[a] corporation may be appointed as a guardian only if it is authorized by its charter to serve as a guardian or in similar fiduciary capacities.” N.C. Gen.Stat. § 35A–1213(c) (2011). Accordingly, Defendant reasons, BOA “could not legally have acted as ... guardian” because—pursuant to Pryor's affidavit—it “is not authorized by its charter to act as a guardian.”
Plaintiffs contest this point by arguing that BOA is a proper party to the action because “[it] is directly liable based on duties owed arising out of a standard of care specific to it as a [holding company].” In support of that argument, Plaintiffs rely on the “source of strength” doctrine, which they describe as a policy adopted by the Federal Reserve Board (“FRB”) to allow plaintiff parties to disregard limited liability and pierce the corporate veil. Citing Anderson v. Abbott for the principle that “federal laws and regulations are not disturbed by state corporate laws,” Plaintiffs argue that our State's principles of corporate limited liability are not applicable because BOA is a bank holding company subject to the FRB's source of strength regulation. See321 U.S. 349, 88 L.Ed. 793,rehearing denied,321 U.S. 804, 88 L.Ed. 1090 (1944). We are unpersuaded.
The source of strength doctrine is a federal regulation that requires bank holding companies to stand in as a “source of financial ... strength” for their subsidiaries. 12 C.F.R. § 225.4(a)(1) (2011). The FRB has stated that this doctrine is meant to incentivize bank holding companies to “act as sources of strength to their subsidiary banks [when threatened with failure] by standing ready to use available resources to provide adequate capital funds to subsidiary banks during periods of financial stress or adversity.” Policy Statement on the Responsibility of Bank Holding Companies to Act as Sources of Strength to Their Subsidiary Banks, 52 Fed.Reg. 15,707 (30 April 1987).
This regulation does not save Plaintiffs' unfair and deceptive trade practices claim. It is a federal mechanism employed by the FRB to regulate practices internal to the banking industry; it is not meant to—and does not—act as a substitute for or complement to our State's well-established jurisprudence on piercing the corporate veil. See generally Bd. of Governors of the Fed. Reserve Sys. v. MCorp Fin., Inc., 502 U.S. 32, 35, 116 L.Ed.2d 358, 394 (1991) (“In October 1988, the [FRB] commenced an administrative proceeding against MCorp, alleging that MCorp violated the source of strength regulation and engaged in unsafe and unsound banking practices that jeopardized the financial condition of its subsidiary banks.”). Plaintiffs have provided no other argument that the veil should be pierced. As a result, Defendant contends that we are bound by Franklin v. Winn Dixie, Inc., 117 N.C.App. 28, 450 S.E.2d 24 (1994), aff'd per curiam,342 N.C. 404, 464 S.E.2d 46 (1995). We agree.
Indeed, as Defendant notes in its brief, even if the doctrine were applicable in this case, “Plaintiffs have presented no evidence that BANA was undercapitalized, nor any allegations that lack of capital support to BANA was related to or caused the alleged guardianship issues.”
In Franklin, the plaintiffs erroneously brought suit against “Winn–Dixie Stores, Inc.,” a separate and distinct party from the proper defendant in that case, “Winn Dixie, Raleigh Inc.” Id. at 38, 450 S.E.2d at 30. Holding that the plaintiffs in that case had—by naming the incorrect party—made “a substantive mistake which [was] fatal to [the] action,” we affirmed the trial court's dismissal. Id. at 40, 450 S.E.2d at 32. Under Franklin, we must affirm the trial court's order granting Defendant's motion for summary judgment and denying Plaintiffs' motion for the same. See In re Civil Penalty, 324 N.C. 373, 384, 379 S.E.2d 30, 37 (1989). “Quite simply, [P]laintiffs sued the wrong corporation.” Franklin, 117 N.C.App. at 35, 450 S.E.2d at 28.
III. Motion to Dismiss for Failure to State a Claim
Plaintiffs also appeal the trial court's grant of Defendant's motion to dismiss regarding their claims of negligence, breach of fiduciary duty, and constructive fraud. We affirm.
The motion to dismiss under N.C.R. Civ. P. 12(b)(6) tests the legal sufficiency of the complaint. In ruling on the motion the allegations of the complaint must be viewed as admitted, and on that basis the court must determine as a matter of law whether the allegations state a claim for which relief may be granted.
Stanback v. Stanback, 297 N.C. 181, 185, 254 S.E.2d 611, 615 (1979) (citations omitted). “This Court must conduct a de novo review of the pleadings to determine their legal sufficiency and to determine whether the trial court's ruling on the motion to dismiss was correct.” Leary v. N.C. Forest Prods., Inc., 157 N.C.App. 396, 400, 580 S.E.2d 1, 4,aff'd per curiam,357 N.C. 567, 597 S .E.2d 673 (2003).
A. Negligence and Breach of Fiduciary Duty
Plaintiffs assert that the trial court erred in dismissing their claims of negligence and breach of fiduciary duty as barred by the applicable statutes of limitations on grounds that there are “issues of fact about when Plaintiffs knew or should have known” about the injuries giving rise to their causes of action. In the alternative, Plaintiffs argue that their claims are protected from dismissal under either the “continuing wrong” exception or the doctrine of equitable estoppel. We find no merit in Plaintiff's argument.
“The statute of limitations for a claim in negligence is three years under N.C. Gen.Stat. § 1–52(5)[.]” Kaleel Builders, Inc. v. Ashby, 161 N.C.App. 34, 45, 587 S.E.2d 470, 478 (2003), disc. review denied,358 N.C. 235, 595 S.E.2d 152 (2004). “In a negligence claim, the statute of limitations begins to run when the plaintiff's right to maintain an action accrues, and a cause of action accrues when the wrong is complete.” Fulton v. Vickery, 73 N.C.App. 382, 389–90, 326 S.E.2d 354, 359,disc. review denied, 313 N.C. 599, 332 S.E.2d 178 (1985) (citation omitted). Plaintiffs allege that BOA served as guardian of the Estate from 12 May 1992 through 5 December 2006. Accordingly, Plaintiffs' negligence claim must have accrued, if at all, by 5 December 2006, when BOA was removed as guardian of the Estate. Because Plaintiffs filed their 30 July 2010 complaint over three years and seven months after that date, we conclude that the trial court properly dismissed their negligence claim as barred by the statute of limitations.
Though we have already determined that BOA is not a proper party to this action and was never guardian of the Estate, we regularly refer to the guardian of the Estate as “BOA” in this section for the purposes of determining whether the trial court properly granted its motion to dismiss Plaintiffs' suit under Rule 12(b)(6).
“[A]llegations of breach of fiduciary duty that do not rise to the level of constructive fraud are governed by the three-year statute of limitations applicable to contract actions contained in N .C. Gen.Stat. § 1–52(1).” Babb v. Graham, 190 N.C.App. 463, 480, 660 S.E.2d 626, 637 (2008) (citation and quotation marks omitted), disc. review denied,363 N.C. 257, 676 S.E.2d 900 (2009).
For cases involving allegations that a trustee is in breach of its fiduciary duty, the statute of limitations begins to run when the claimant knew or, by due diligence, should have known of the facts constituting the basis of the claim. If the materials before the court present a factual question as to when a plaintiff knew or should have known of the facts giving rise to the claim, then this issue must be submitted to the jury. Under North Carolina law, the statute of limitations begins to run against an infant who is represented by a guardian at the time the cause of action accrues. Therefore, if an infant is represented by a guardian, the statute of limitations for a breach of fiduciary duty claim begins to run when her guardian knew or should have known of the facts giving rise to the claim.
Toomer v. Branch Banking and Trust Co., 171 N.C.App. 58, 68–69, 614 S.E.2d 328, 336 (citations, quotation marks, brackets, and ellipsis omitted), disc. review denied,360 N.C. 78, 623 S.E .2d 263 (2005).
“To state a claim for breach of fiduciary duty, a plaintiff must allege that a fiduciary relationship existed and that the fiduciary failed to act in good faith and with due regard to [the] plaintiff's interests.” Id. at 70,614 S.E.2d at 337 (certain brackets omitted). In their complaint, Plaintiffs allege that, at some point in 2006, Ms. Edwards petitioned the Wake County Clerk of Court
for removal of BOA as the [g] uardian of the Estate ... based on allegations that BOA was not responsive to matters important to the Estate and to the well-being of [Mary,] had charged significant hidden fees that were unfair[,] and had assigned management of the [E]state to inappropriate trust officers and employees.
Plaintiffs also allege that, on 5 December 2006—more than three years and seven months before Plaintiffs filed their complaint—BOA
was removed as [g]uardian of the Estate on findings by the [c] ourt that BOA was financially inattentive to issues associated with [Mary's] health care ... [, ] failed to notice her majority ... for more than nine years ... [, ] [failed] to properly attend to the matter of submitting a final accounting to close the ... Estate[,] and [, ] as such[,] ... acted as [g] uardian without qualification or [c]ourt authority for nine years.
Despite these allegations, Plaintiffs contend that their claims for breach of fiduciary duty “arguably” accrued before the statute of limitations had run, on either 2 August 2007, when they allege they learned that BOA had cancelled the homeowners insurance on Mary's home, or 18 September 2007, when they allege they first learned that BOA had withheld certain sums of monthly court-ordered payments. We disagree.
There is no factual question that, at the time of the 5 December 2006 hearing before the Wake County Clerk of Court, Plaintiffs believed BOA had, inter alia, charged significant hidden fees, acted unfairly, hired inappropriate trustees, was financially inattentive and, therefore, failed to act in good faith and with due regard for interests of the Estate. These facts constitute the basis of Plaintiffs' claim of breach of fiduciary duty. The fact that later alleged transgressions were discovered in August and September of 2007 only augments the foundation of Plaintiffs' claim; it does not complete it. Accordingly, we hold that Plaintiffs knew or, by due diligence, should have known of the facts providing the basis of their claim of breach of fiduciary duty, at the latest, on the date of the 5 December 2006 hearing before the Wake County Clerk of Court, more than three years and seven months before they filed their complaint. As a result, the trial court properly dismissed Plaintiffs' claim of breach of fiduciary duty as time barred.
In an alternative argument, Plaintiffs contend that their complaint is saved by the “continuing wrong doctrine.” Specifically, Plaintiffs assert that they “may recover for all conduct that was part of the violation, including conduct that occurred outside of the customary limitations period .... [because BOA's] wrongful conduct continued into 2008,” when it allegedly filed a W–3 report and W–2 forms with the IRS for payments made to the Parents after its removal as guardian. We again disagree.
The continuing wrong doctrine is an exception to the general rule that a cause of action accrues as soon as the plaintiff has the right to sue. However, in order for the continuing wrong doctrine to toll the statute of limitations, the plaintiff must show a continuing violation by the defendant that is occasioned by continual unlawful acts, not by continual ill effects from an original violation. When a court determines whether the doctrine applies, it should consider the particular policies of the statute of limitations in question, as well as the nature of the wrongful conduct and harm alleged.
Stratton v. Royal Bank of Canada, 211 N.C.App. 78, 86, 712 S.E.2d 221, 229 (2011) (quotation marks, citations, and brackets omitted) (holding that the continuing wrong doctrine did not apply because “the continuing wrongs alleged in [that] case—the deprivation of shareholder rights and nonpayment of dividends—[were] clearly the continual ill effects of one antecedent wrong: the alleged conversion of [the plaintiff's] stock”). To the extent that BOA's alleged filing of a W–3 report or filing of W–2 forms could constitute a “continuing wrong,” we find these actions are more akin to a “continuing ill effect” of BOA's past alleged harmful conduct than “a continuing violation by the defendant that is occasioned by continual unlawful acts.” See id . Accordingly, Plaintiffs' second argument is overruled. See generally id. at 87, 712 S.E.2d at 229–30 (“The conversion of [the plaintiff's] stock ... should have been discovered through reasonable diligence.... Applying the continuing wrong doctrine under these facts would discourage shareholders from promptly investigating and litigating stock conversion claims, thereby defeating the policy objectives advanced by statutes of limitations.”).
Plaintiffs also contend that their claims are saved under the doctrine of equitable estoppel, asserting that “[BOA's] conduct was concealment and misrepresentations it knew or should have known upon which Plaintiffs relied and lacked knowledge of means to the real facts.” We find this argument unpersuasive.
Equitable estoppel is present “when a party has been induced by another's acts to believe that certain facts exist, and that party rightfully relies and acts upon that belief to his or her detriment.” Ussery v. Branch Banking and Trust Co., ––– N.C.App. ––––, ––––, 743 S.E.2d 650, –––– (2013) (citation, quotation marks, and brackets omitted), available at 2013 WL 2179287 at *4. “If the evidence in a particular case raises a permissible inference that the elements of equitable estoppel are present, but other inferences may be drawn from contrary evidence, estoppel is a question of fact for the jury.” Id. at *5 (citation and emphasis omitted). Plaintiffs' complaint does not allege that they were induced to believe that any certain facts existed or that they relied on such an inducement to their detriment. Rather, the complaint is limited to allegations that BOA acted “unscrupulous[ly],” “failed to make a full, open disclosure of material facts it should have known, and[, inter alia,] failed to deal with [Plaintiffs] fairly and honestly in its fiduciary duties and its representations to them[.]” Because these allegations do not support an inference that the elements of equitable estoppel are present, this argument is overruled.
Next, Plaintiffs contest as erroneous the trial court's statement in its 27 September 2011 order that “[t]he allegations of hidden fees, unfairness and inattention which formed the basis of the guardian's 2006 petition to the Clerk of Superior Court to remove the guardian are substantially similar to the allegations of [P]laintiffs' instant complaint.” In support of their argument for this so-called “conclusion error,” Plaintiffs cite to United Va. Bank v. Air-lift Assocs., Inc., 79 N.C.App. 315, 323, 339 S.E.2d 90, 94 (1986) for the proposition that conclusions of law in an order granting a Rule 12(b)(6) motion are “unnecessary surplusage.” Alternatively, Plaintiffs dispute the validity of the trial court's “conclusion,” in general, as not rooted in the facts of the case. Because neither of these arguments speaks to the issue on appeal of whether the trial court properly granted Defendant's motion to dismiss Plaintiffs' claims for breach of fiduciary duty or negligence and because Plaintiffs do not assert any cognizable error regarding this contention on appeal, this argument is overruled.
B. Constructive Fraud
Plaintiffs also assert that the trial court erred in dismissing their claim of constructive fraud, which is subject to a ten-year statute of limitations, on grounds that it was “inconsistent with case law interpreting constructive fraud.” See generally Toomer, 171 N.C.App. at 67, 614 S.E.2d at 335 (“[A] claim of constructive fraud based upon a breach of fiduciary duty falls under the ten-year statute of limitations contained in N.C. Gen.Stat. § 1–56[.]”). We affirm.
In its order dismissing Plaintiffs' claims, the trial court determined that Plaintiffs had failed to properly allege a claim of constructive fraud because “the pleadings ... do not assert that ... Defendant took advantage of its position of trust and confidence to hurt [Plaintiffs] or sought to benefit itself.” In support of their argument that this determination was inconsistent with our constructive fraud jurisprudence, Plaintiffs cite to Orr v. Calvert, 212 N.C.App. 254, ––––, 713 S.E.2d 39, 49 (Hunter, Jr., J., dissenting), reversed per curiam for the reasons stated in the dissenting opinion,365 N.C. 320, 720 S.E.2d 387 (2011), and argue that they were, in fact, only required to plead “facts and circumstances (1) which created the relation of trust and confidence and (2) led up to and surrounded the transaction in which [D]efendant is alleged to have taken advantage of his position of trust.” Plaintiffs argue that, if they were successful in this regard, the burden was then on Defendant to rebut their allegations with statements that it acted fairly and openly in its dealings with Plaintiffs.
We do not reach that issue here. To the extent that Plaintiffs properly pled constructive fraud, we find that the court was nonetheless correct to dismiss that claim because Defendant is not a proper party to this action. Regarding that question, the trial court made the following observations:
14.... Defendant also asserts that it is not the proper party to this action and that the named [d] efendant, [BOA], has no relationship to the real parties in interest. It further asserts that [BANA] is the proper party. Defendant seeks dismissal of Plaintiffs' claims on this basis.
15. Based upon the record before the [c] ourt, the [c] ourt is unable to resolve this issue on the pleadings, and therefore DENIES ... Defendant's motion without prejudice to further consideration of the issue upon presentation of sufficient competent evidence.
As we have already discussed, Defendant presented sufficient competent evidence to establish that it was not a proper party to this action at the summary judgment hearing. For that reason, Plaintiffs' claim of constructive fraud, to the extent that Plaintiffs successfully pled such a claim, was properly denied. See Manpower of Guilford Cnty., Inc. v. Hedgecock, 42 N.C.App. 515, 519, 257 S.E.2d 109, 113 (1979) (“A correct ruling by a trial court will not be set aside merely because the court gives a wrong or insufficient reason for its ruling. The ruling must be upheld if it is correct upon any theory of law.”) (citations omitted).
We offer no opinion on whether Plaintiffs properly pled a claim of constructive fraud.
AFFIRMED. Judges McGEE and HUNTER, JR., ROBERT N., concur.
Report per Rule 30(e).