Walters v. Cole, 148 NC App 717 (01-70) 02/19/2002

Appeal by plaintiffs from order dated 21 March 2000 by Judge Wiley F. Bowen in Harnett County Superior Court. Heard in the Court of Appeals 29 January 2002.

Mark A. Key for plaintiff-appellants.

Fletcher, Ray & Satterfield, L.L.P., by R. Jay Short, Jr., for defendant-appellees.

    GREENE, Judge.

    Jimmy and Mary Walters (collectively Plaintiffs) appeal an order dated 21 March 2000 dismissing their fraud claim and the majority of their breach of contract and unjust enrichment claims against their daughter Pamela Cole (Mrs. Cole) and their son-in-law Paul W. Cole (Mr. Cole) (collectively Defendants).
    On 23 February 2000, Plaintiffs filed a complaint against Defendants alleging in pertinent part:
        5. That on or about March 31, 1994, at the request of [D]efendants, [P]laintiffs advanced [D]efendants $8,200.00 to assist them with the down payment on their ([D]efendants') marital residence upon the premise that . . . [D]efendants would repay the same.
        6. That on about August 12, 1994 [P]laintiffs advanced . . . [D]efendants $1[,]500.00 for various personal needs upon the premise that . . . [D]efendants would repay the same.

        7. That on or about January 26, 1995 in order to enable [D]efendants to make improvements [to their marital residence and surrounding land] and at the request of . . . [D]efendants[,] [P]laintiffs advanced [D]efendants $10,000.00.
        8. That on or about February 15, 1995 and at . . . [D]efendants' request[,] [P]laintiffs advanced [D]efendants $300.00 and $500.00 for their personal needs.

        9. That on or about June 8, 1998 and July 6, 1998 at the request of [D]efendants[,] [P]laintiffs advanced [D]efendants $400.00 and $135.10 for improvements to the land on which the marital residence is located.

        10. That on October 6, 1998 . . . [P]laintiffs wrote a letter to [D]efendants requesting payment. That . . . [D]efendants in complete disregard of their promises and assurances and duty imposed upon them by trust confided in them by . . . [P]laintiffs and their familial relationship to . . . [P]laintiffs failed to repay the funds advanced.

Plaintiffs sought damages on the grounds of breach of contract, unjust enrichment, and fraud. In respect to their fraud claim, Plaintiffs alleged:
        That at the time the advancements were made . . . [D]efendants assured [P]laintiffs that they would repay each advancement. That . . . [D]efendants['] failure to make payment shows that at the time of . . . [P]laintiffs['] faith in . . . [D]efendants['] representations to obtain . . . [P]laintiffs['] money and that but for . . . [D]efendants' fraudulent representations that they would repay the advancements to . . . [P]laintiffs . . . [,] [P]laintiffs would not have made the advancements to [D]efendants.

    On 6 March 2000 and 20 March 2000, Defendants filed separateanswers and motions to dismiss Plaintiffs' claims on the basis that (1) the complaint failed to state a claim upon which relief can be granted and (2) the three-year statute of limitations had run on Plaintiffs' breach of contract and unjust enrichment claims pursuant to N.C. Gen. Stat. §§ 1-15 and 1-52(1). In an order dated 21 March 2000, the trial court noted in its findings of fact the amounts of the advances Plaintiffs had made to Defendants and the dates on which they had been made. The trial court further found that “Plaintiffs have alleged that . . . Defendants breached an oral contract to repay this money, have asserted a fraud claim against . . . Defendants and a[n] unjust enrichment claim against . . . Defendants.” The trial court then concluded Plaintiffs' claim for fraud should be dismissed for failure to state a claim under Rule 12(b)(6) because Plaintiffs did not allege fraud with specificity. The trial court also dismissed Plaintiffs' breach of contract and unjust enrichment claims as to all advances prior to 1998 on the basis that the applicable statute of limitations had run as to those advances.
    Plaintiffs and Mr. Cole reached a settlement as to the remaining allegations and, on 29 June 2000, filed a voluntary dismissal as to Mr. Cole. The dispute as to the advances made by Plaintiffs to Defendants in 1998 totaling $535.10 was tried against Mrs. Cole on 26 June 2000. The trial court entered an order in Plaintiffs' favor on 7 September 2000. Plaintiffs filed their notice of appeal to the trial court's 21 March 2000 order on 5 July 2000.

___________________________

The issues are whether the trial court erred by dismissing: (I) Plaintiffs' fraud claim for failure to state a claim upon which relief can be granted under Rule 12(b)(6) based on Plaintiffs' failure to allege fraud with specificity; and (II) Plaintiffs' claims for breach of contract and unjust enrichment for the pre- 1998 advances based on the statute of limitations.

    Plaintiffs contend their complaint is sufficient to allege the elements of constructive fraud. We disagree.
    “In all averments of fraud, duress or mistake, the circumstances constituting fraud or mistake shall be stated with particularity.” N.C.G.S. § 1A-1, Rule 9(b) (1999). The particularity requirements for actual fraud and constructive fraud differ. Benfield v. Costner, 67 N.C. App. 444, 446, 313 S.E.2d 203, 205 (1984).
        The very nature of constructive fraud defies specific and concise allegations and the particularity requirement may be met by alleging facts and circumstances “(1) which created the relation of trust and confidence, and (2) [which] led up to and surrounded the consummation of the transaction in which [the] defendant is alleged to have taken advantage of his position of trust to the hurt of [the] plaintiff.”

Id. (quoting Terry v. Terry, 302 N.C. 77, 85, 273 S.E.2d 674, 679 (1981)). An allegation of a “mere family relationship” is not particular enough to establish a confidential or fiduciary relationship. Id. (citing Terry, 302 N.C. at 86, 273 S.E.2d at 679).    In this case, Plaintiffs' complaint does not establish the necessary confidential or fiduciary relationship between Plaintiffs and Defendants. The complaint merely alleges a fiduciary relationship based on family ties. As such, it fails to allege constructive fraud as a cause of action. See id.

    Plaintiffs further argue their claims for breach of contract and unjust enrichment were improperly dismissed based on the statute of limitations. We agree.
    Motions to dismiss for failure to state a claim for relief are determined on the basis of the pleadings alone. Wilkes v. Bd. of Alcoholic Control, 44 N.C. App. 495, 497, 261 S.E.2d 205, 207 (1980). “A statute of limitations defense may properly be asserted in a Rule 12(b)(6) motion to dismiss if it appears on the face of the complaint that such a statute bars the claim.” Horton v. Carolina Medicorp, Inc., 344 N.C. 133, 136, 472 S.E.2d 778, 780 (1996). In this case, Plaintiffs' complaint is not clear as to the date of breach. Penley v. Penley, 314 N.C. 1, 20, 332 S.E.2d 51, 62 (1985) (statute of limitations begins to run on the date the promise between the parties is broken). Consequently, it cannot be determined from the face of the complaint that the statute of limitations has run. Accordingly, the trial court's dismissal of Plaintiffs' breach of contract and unjust enrichment claims relating to Plaintiffs' pre-1998 advances was improper.   (See footnote 1)     Affirmed in part, reversed and remanded in part.
    Judges HUNTER and TYSON concur.
    Report per Rule 30(e).

Footnote: 1