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All opinions are subject to modification and technical correction prior to official publication in the North Carolina Reports and North Carolina Court of Appeals Reports. In the event of discrepancies between the electronic version of an opinion and the print version appearing in the North Carolina Reports and North Carolina Court of Appeals Reports, the latest print version is to be considered authoritative.
SHIRLEY D. PILES, Plaintiff, v. ALLSTATE INSURANCE COMPANY and
RICKY MCGHEE, Defendants
Filed: 4 December 2007
1. Insurance; Statutes of Limitation and Repose--automobile insurance_UIM
coverage_forged rejection_fraud and negligence claims
The trial court erred by dismissing as time barred claims by plaintiff insured whose
signature on a UIM rejection form was allegedly forged against defendant automobile insurer and
its agent to recover for negligence, fraud, constructive fraud, breach of covenant of good faith
and fair dealing with punitive damages, unfair and deceptive trade practices, and breach of
fiduciary duty because: (1) the issue of whether a claim is barred by the statute of limitations
should be submitted to the jury when the evidence is sufficient to support an inference that the
limitations period has not expired; (2) plaintiff asserted facts in her complaint sufficient to
support an inference that the limitations periods for her claims had not expired; and (3) the date
that plaintiff discovered or should have discovered the alleged fraud and negligence by
defendants was a question of fact for the jury.
2. Fraud--actual and constructive fraud--motion to dismiss--requirement to plead with
The trial court erred by dismissing plaintiff's claims for fraud and constructive fraud for
failure to plead with sufficient particularity, because: (1) plaintiff was required to show the
existence of a fiduciary duty and a breach of that duty; and (2) the facts and circumstances were
alleged with sufficient particularity to support each required element of the claims when plaintiff
outlined the fiduciary relationship she had with her insurance agent, as well as with Allstate
through the insurance agent, and put forward allegations of forgery and deception that culminated
in no UIM coverage from Allstate for plaintiff.
Judge HUNTER concurring in a separate opinion.
Appeal by plaintiff from order entered 13 July 1006 by Judge
Orlando F. Hudson, Jr. in Superior Court, Durham County. Heard in
the Court of Appeals 21 August 2007.
The Law Office of James Scott Farrin, by Marie D. Lang and
Kenneth M. Gondek, for plaintiff-appellant.
Larcade, Heiskell & Askew, PLLC, by Roger A. Askew and
Margaret P. Eagles, for defendants-appellees.
The issue of whether a cause of action is barred by thestatute of limitations should be submitted to a jury [w]hen the
evidence is sufficient to support an inference that the limitations
period has not expired[.]
(See footnote 1)
Here, the plaintiff alleges fraud and
negligence on the part of the defendants, the discovery of which
would begin the accrual of her causes of action. Because we find
that the date of her discovery is a question of fact for a jury, we
reverse the trial court's dismissal of her claims as time-barred as
a matter of law.
Plaintiff Shirley Piles alleges, inter alia, that Defendant
Ricky McGhee, an Allstate Insurance agent, or someone acting on his
behalf and with his authority, impermissibly signed Ms. Piles's
name in July 1998 to a Selection/Rejection Form for Uninsured
Motorist (UM) Coverage or Combined Uninsured/Underinsured Motorist
(UM/UIM) Coverage for her insurance policy. The allegedly forged
form rejected combined UM/UIM coverage and selected only UM
coverage in the amount of $100,000 per person and $300,000 per
accident. As a result, Allstate Insurance issued a car insurance
policy to Ms. Piles and her husband on 10 July 1998, which offered
liability coverage in the amount of $100,000 per person and
$300,000 per accident and UM coverage in the amount of $100,000 per
person and $300,000 per accident but did not, on its face, provide
On 27 October 2000, while driving one of the vehicles covered
by her Allstate Insurance policy, Ms. Piles was involved in a caraccident; she was not at fault in the accident but did suffer
personal injuries as a result. Debra Murray, the party responsible
for the accident, carried liability coverage through Nationwide
Insurance Company in the amount of $50,000 per person and $100,000
In February 2003, Ms. Piles contacted Mr. McGhee to determine
whether her Allstate Insurance policy contained UIM coverage and
was told that it did not. Nonetheless, on 20 February 2003, Ms.
Piles notified Allstate Insurance that she intended to pursue a
claim for UIM coverage. On 3 March 2003, Allstate Insurance
provided Ms. Piles's attorney with a copy of the
Selection/Rejection Form that Ms. Piles alleges was forged.
On 27 October 2003, Ms. Piles filed suit against Ms. Murray in
connection with the injuries she suffered in the accident. Her
attorney also forwarded a copy of the complaint against Ms. Murray
to Allstate Insurance, stating Ms. Piles's belief that the UIM
Selection/Rejection Form was forged and that she intended to pursue
a claim for UIM coverage. Allstate Insurance advised Ms. Piles on
18 December 2003 that it maintained its position that she did not
have UIM coverage under her policy.
On 21 June 2004, Ms. Piles informed Allstate Insurance of her
scheduled mediation in the lawsuit against Ms. Murray. She also
provided Allstate Insurance with copies of her signature,
reiterating her claim that the signature on the UIM
Selection/Rejection Form was forged. On 4 November 2004,
Nationwide agreed to tender its limits of $50,000 under Ms.Murray's insurance policy to Ms. Piles. On 9 November 2004, Ms.
Piles's attorney forwarded Nationwide's letter tendering its limits
to Allstate Insurance and requested arbitration with respect to Ms.
Piles's claim for UIM coverage of $50,000. Allstate Insurance
again asserted that Ms. Piles did not have UIM coverage as part of
her insurance policy and denied coverage.
After providing Allstate Insurance with a written report from
a handwriting expert stating his belief that the signature on the
Selection-Rejection Form was a forgery, Ms. Piles was again denied
coverage by Allstate Insurance. She then filed suit against
Allstate Insurance and Mr. McGhee on 22 November 2005, alleging
fraud, constructive fraud, breach of fiduciary duty, and negligence
by Mr. McGhee; and breach of contract, breach of covenant of good
faith and fair dealing with punitive damages, fraud, constructive
fraud, unfair and deceptive trade practices, negligent infliction
of emotional distress, breach of fiduciary duty, and negligence by
Allstate Insurance. On 30 January 2006, Allstate Insurance and Mr.
McGhee filed an answer and motion to dismiss for failure to state
a claim for which relief may be granted and for failure to comport
with the statutory pleading requirements for the claims of fraud
and constructive fraud. Among other defenses, Allstate Insurance
and Mr. McGhee asserted that Ms. Piles should be barred from suit
by the applicable statutes of limitations.
The trial court heard arguments on the motion to dismiss on 10
July 2006 and entered an order granting the motion on 13 July 2006,
stating in relevant part: . . . [T]he court, having carefully reviewed
the plaintiff's complaint and having
considered the applicable [case law], the
applicable statutes of limitations as well as
N.C. Rule of Civil Procedure 9(b) with regard
to plaintiff's claims for fraud and
constructive fraud, and the court finds that
plaintiff's complaint fails to state claims
upon which relief may be granted and the
Motion to [dismiss] should be GRANTED[.]
Ms. Piles now appeals, arguing that the trial court erred in (I)
dismissing each of the claims for relief in her complaint as not
timely filed and barred by the statute of limitations; and (II)
dismissing the claims for fraud and constructive fraud for failure
to plead with sufficient particularity. In the alternative, Ms.
Piles contends that Allstate Insurance and Mr. McGhee should be
equitably estopped from asserting the statute of limitations as a
We note at the outset that appellate review of the dismissal
of an action under North Carolina Rule of Civil Procedure 12(b)(6)
is subject to more stringent rules than other procedural postures
that come before us. Okuma Am. Corp. v. Bowers, 181 N.C. App. 85,
88, 638 S.E.2d 617, 619 (2007); see also N.C. Gen. Stat. § 1A-1,
Rule 12(b)(6) (2005). We consider only the question of whether, as
a matter of law, the allegations of the complaint are sufficient to
state a claim upon which relief can be granted under some legal
theory. See id. Thus, we accept as true the well-pleaded factual
allegations of the complaint and review the case de novo to test
the law of the claim, not the facts which support it. White v.
White, 296 N.C. 661, 667, 252 S.E.2d 698, 702 (1979) (quotation and
citation omitted); see also Locklear v. Lanuti, 176 N.C. App. 380,383, 626 S.E.2d 711, 714 (2006).
 Ms. Piles first argues that the trial court erred in
dismissing the claims for relief in her complaint as untimely filed
and therefore barred by the statutes of limitations.
(See footnote 2)
According to our state Supreme Court:
The application of any statutory or
contractual time limit requires an initial
determination of when that limitations period
begins to run. A cause of action generally
accrues when the right to institute and
maintain a suit arises. Thus, a statutory
limitations period on a cause of action
necessarily cannot begin to run before a party
acquires a right to maintain a lawsuit.
Register v. White
, 358 N.C. 691, 697, 599 S.E.2d 549, 554 (2004)
(internal citations and quotations omitted); see also Raftery v.
Wm. C. Vick Constr. Co.
, 291 N.C. 180, 186-87, 230 S.E.2d 405, 408
(1976) (holding that, until there is a legal right to maintain the
underlying action, the statute of limitations cannot run).
Although it is well established that [w]hether a cause of action
is barred by the statute of limitations is a mixed question of law
and fact[,] Jack H. Winslow Farms, Inc. v. Dedmon
, 171 N.C. App.
754, 756, 615 S.E.2d 41, 43, disc. review denied
, 360 N.C. 64, 621S.E.2d 625 (2005), we have also noted that [w]hen the evidence is
sufficient to support an inference that the limitations period has
not expired, the issue should be submitted to the jury. Everts v.
, 147 N.C. App. 315, 319, 555 S.E.2d 667, 670 (2001)
(citing Little v. Rose
, 285 N.C. 724, 727, 208 S.E.2d 666, 668
With the exception of constructive fraud, which is governed by
a ten-year statute of limitations, see
N.C. Gen. Stat. § 1-56
(2005), each of Ms. Piles's claims is subject to either a three- or
four-year statute of limitations. See id.
§ 1-52(1) (three years
for an action [u]pon a contract, obligation or liability arising
out of a contract, express or implied); § 1-52(5) (three years
for any other injury to the person or right of another, not
arising on contract and not hereafter enumerated); § 1-52(9)
(three years for relief on the ground of fraud or mistake; the
cause of action shall not be deemed to have accrued until the
discovery by the aggrieved party of the facts constituting the
fraud or mistake.); § 75-16.2 (four years for actions brought
under the Unfair and Deceptive Trade Practices Act).
Additionally, with respect to a claim for fraud, we have
defined discovery within N.C. Gen. Stat. § 1-52(9) as actual
discovery or the time when the fraud should have been discovered in
the exercise of due diligence. Spears v. Moore
, 145 N.C. App.
706, 708, 551 S.E.2d 483, 485 (2001). Our Supreme Court recently
reiterated that accrual begins at the time of discovery regardless
of the length of time between the fraudulent act or mistake andplaintiff's discovery of it. Forbis v. Neal
, 361 N.C. 519, 524,
649 S.E.2d 382, 386 (2007) (quoting Feibus & Co. v. Godley Constr.
, 301 N.C. 294, 304, 271 S.E.2d 385, 392 (1980), reh'g denied
301 N.C. 727, 274 S.E.2d 228 (1981)). Most significantly,
[o]rdinarily, a jury must decide when fraud should have been
discovered in the exercise of reasonable diligence under the
When, as here, the fraud is allegedly
committed by the superior party to a
confidential or fiduciary relationship, the
aggrieved party's lack of reasonable diligence
may be excused. This principle of leniency
does not apply, however, when an event occurs
to excite [the aggrieved party's] suspicion
or put her on such inquiry as should have led,
in the exercise of due diligence, to a
discovery of the fraud.
649 S.E.2d at 386 (internal citations omitted).
In the instant case, Ms. Piles does not directly assert a UIM
claim against Allstate Insurance in her complaint; rather, she
argues that she has no UIM claim to assert due to their fraud and
negligence, committed in breach of their fiduciary duty to her.
Further, she points to North Carolina General Statutes § 20-
279.21(b)(4) (2005), which makes UIM coverage a default provision
of all automobile insurance unless explicitly rejected by the
insured, to support her breach of contract claim, contending that
she did not explicitly reject UIM coverage so Allstate Insurance
breached the default provision of the contract by denying her UIM
As such, the critical dates at issue in Ms. Piles's complaint
are when she discovered or reasonably should have discovered thealleged fraud or negligence committed by Allstate Insurance and Mr.
McGhee, and when she was denied UIM coverage by Allstate Insurance.
Ms. Piles signed her insurance policy in 1998, was injured in the
car accident in October 2000, settled with the other driver's
insurance company, exhausting those policy limits, in November
2004, and subsequently filed this suit in November 2005. Ms. Piles
claims that she had no knowledge that her policy did not include
UIM coverage until she was first informed of that fact by Allstate
Insurance in February 2003. Additionally, she would not have
acquired any contractual right to such coverage - if indeed it
should have existed - until November 2004, when she exhausted the
other driver's policy. See Register
, 358 N.C. at 698, 599 S.E.2d
at 555 ([A]n insured's contractual right to UIM coverage is
expressly conditioned on the exhaustion of the liability carrier's
policy limits. Exhaustion occurs when the liability carrier has
tendered the limits of its policy in a settlement offer or in
satisfaction of a judgment. (citations omitted)).
Likewise, according to the facts alleged in her complaint, Ms.
Piles's claims for breach of covenant of good faith and fair
dealing with punitive damages and unfair and deceptive trade
practices are premised at least in part on Allstate Insurance's
actions in response to the claim she filed for UIM coverage. As
such, they would have accrued in November 2004, when she was denied
UIM coverage. Morever, the basis of the constructive fraud claims
clearly falls within ten years of the complaint, regardless of what
dates are used. The breach of fiduciary duty claims also accruedwhen Ms. Piles allegedly discovered that her policy did not include
UIM coverage. See State Farm Fire & Cas. Co. v. Darsie
, 161 N.C.
App. 542, 551, 589 S.E.2d 391, 398 (2003) (finding that an insured
was excused from discovering the terms of her insurance policy by
relying on representations made by her fiduciary insurance agent),
disc. review denied and dismissed
, 358 N.C. 241, 594 S.E.2d 194
Thus, Ms. Piles has asserted facts in her complaint
sufficient to support an inference that the limitations period has
not expired, Everts
, 147 N.C. App. at 319, 555 S.E.2d at 670;
therefore, we find that the trial court erred by finding as a
matter of law that her claims are time-barred by the relevant
statutes of limitations. The date of Ms. Piles's discovery of the
alleged fraud or negligence - or whether she should have discovered
it earlier through reasonable diligence - is a question of fact for
a jury, not an appellate court. We therefore reverse the trial
court's dismissal on statute of limitations grounds of Ms. Piles's
claims for negligence, fraud, constructive fraud, breach of
contract, breach of covenant of good faith and fair dealing with
punitive damages, unfair and deceptive trade practices, and breach
of fiduciary duty.
 Next, Ms. Piles argues that the trial court erred in
dismissing her claims for fraud and constructive fraud for failure
to plead with sufficient particularity. We agree.
North Carolina Rule of Civil Procedure 9(b) provides that acomplaint alleging fraud must state the relevant circumstances
with particularity. N.C. Gen. Stat. § 1A-1, Rule 9(b) (2005);
see also Carver v. Roberts
, 78 N.C. App. 511, 513, 337 S.E.2d 126,
128 (1985) (In order to survive a motion to dismiss pursuant to
Rule 12(b)(6), a complaint for fraud must allege with particularity
all material facts and circumstances constituting the fraud.).
Nevertheless,[i]t is sufficient if, upon a liberal construction of
the whole pleading, the charge of fraud might be supported by proof
of the alleged constitutive facts. Id.
(quoting Brooks Equip. &
Mfg. Co. v. Taylor
, 230 N.C. 680, 686, 55 S.E.2d 311, 315 (1949)).
The elements of fraud are (1) a false representation or
concealment of a material fact, (2) reasonably calculated to
deceive, (3) made with intent to deceive, (4) which does in fact
deceive, (5) resulting in damage to the injured party. Id
Similarly, to prove constructive fraud, a claimant must allege
facts and circumstances (1) which created the relation of trust
and confidence, and (2) 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 plaintiff.
State ex rel. Long v. Petree Stockton, L.L.P.
, 129 N.C. App. 432,
445, 499 S.E.2d 790, 798 (quoting Rhodes v. Jones
, 232 N.C. 547,
549, 61 S.E.2d 725, 726 (1950)), disc. review dismissed
, 349 N.C.
240, 558 S.E.2d 190 (1998). Further, an essential element of
constructive fraud is that 'defendants sought to benefit
themselves' in the transaction. Id.
(quoting Barger v. McCoy
Hillard & Parks
, 346 N.C. 650, 667, 488 S.E.2d 215, 224 (1997)). Indeed, [p]ut simply, a plaintiff must show (1) the existence of
a fiduciary duty, and (2) a breach of that duty. Keener Lumber
Co. v. Perry
, 149 N.C. App. 19, 28, 560 S.E.2d 817, 823, disc.
review dismissed and denied
, 356 N.C. 164, 568 S.E.2d 196 (2002).
After a careful review of Ms. Piles's complaint, and bearing
in mind the directive to give it a liberal construction upon a
Rule 12(b)(6) motion to dismiss, we conclude that the facts and
circumstances are alleged with sufficient particularity to support
each required element of the claims of fraud and constructive
fraud. Ms. Piles outlined the fiduciary relationship she had with
Mr. McGhee, her insurance agent, as well as with Allstate Insurance
through him, and put forward allegations of forgery and deception
that culminated in no UIM coverage from Allstate Insurance for Ms.
Piles. These facts are sufficient to withstand a motion to
dismiss. We therefore reverse the trial court and reinstate Ms.
Piles's claims for fraud and constructive fraud.
Judge HUNTER concurs by separate opinion.
Judge BRYANT concurs.
HUNTER, Judge, concurring.
While I concur with the majority that the ruling of the trial
court should be reversed for the reasons stated therein, I write
separately to clarify when the statute of limitations began to run
against Ms. Piles on her claims of fraud and constructive fraud.
I agree that the critical dates at issue in Ms. Piles'scomplaint are when she discovered or reasonably should have
discovered the alleged fraud or negligence committed by Allstate
Insurance and Mr. McGhee[.] I disagree, however, that the dates
are material as to when she exhausted the policy limits of the
other motorist's insurance company.
As the majority correctly notes, this is not a UIM claim
against Allstate Insurance[,] but is an action alleging, inter
alia, fraud and constructive fraud. The statute of limitations on
actions based on fraud begins to toll when the party actually
discovers the fraud or the time when the fraud should have been
discovered in the exercise of due diligence. Spears v. Moore, 145
N.C. App. 706, 708, 551 S.E.2d 483, 485 (2001). In this case, Ms.
Piles alleged that she discovered the fraud on 3 March 2003, when
she received a copy of the Selection/Rejection Form related to UIM.
Accordingly, were the jury to agree with her that she should have
discovered the fraud on that date and not before, Ms. Piles would
have had three years from 3 March 2003 in which to file a suit for
fraud and ten years for filing her action on constructive fraud.
See N.C. Gen. Stat. § 1-52(9) (2005) (party may file action on
fraud within three years of discovering the facts constituting the
fraud); Adams v. Moore, 96 N.C. App. 359, 362, 385 S.E.2d 799, 801
(1989) (aggrieved party has ten years in which to file an action
for constructive fraud). She filed her actions within both
applicable statutes of limitation in November 2005. Her claims on
fraud, therefore, should not have been dismissed for failure to
bring a cause of action within the statutory time frame. Because this is not a UIM action, Ms. Piles was not required
to exhaust the policy limitations on the other motorist's liability
coverage before bringing her actions for fraud. Were that the
case, Ms. Piles would have three years to file her action for fraud
from November 2004, the date on which the policy limits were
exhausted. This is not the standard to determine when a claim of
fraud begins to toll. Accordingly, I disagree with the majority
insofar as they hold that Ms. Piles can wait to exhaust the policy
limitations before the statute of limitations starts to run in the
Everts v. Parkinson
, 147 N.C. App. 315, 319, 555 S.E.2d
667, 670 (2001) (citing Little v. Rose
, 285 N.C. 724, 727, 208
S.E.2d 666, 668 (1974)).
Ms. Piles argued each of the claims asserted in her
complaint in her brief to this Court, except for her claim for
negligent infliction of emotional distress (NIED) against
Allstate Insurance. Although she cited the relevant assignment
of error in her brief, she failed to offer any argument in
support of her contention that the claim for NIED should not have
been dismissed. We therefore deem it abandoned. See
App. P. 28(b)(6) (Assignments of error not set out in the
appellant's brief, or in support of which no reason or argument
is stated or authority cited, will be taken as abandoned.).
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