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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.
NORTH CAROLINA COURT OF APPEALS
Filed: 2 September 2008
DAVID M. GOODMAN
v. Wake County
No. 06 CVS 6714
HOLMES & McLAURIN ATTORNEYS
AT LAW, a/k/a HOLMES &
McLAURIN, a/k/a HOLMES &
McLAURIN, ATTORNEYS, a North
Carolina Partnership; HOLMES
& McLAURIN, L.L.P., a North
Carolina Registered Limited
R. EDWARD McLAURIN, JR., P.L.L.C.,
a North Carolina Professional
Limited Liability Company;
RALPH EDWARD McLAURIN, JR.; and
EDWARD S. HOLMES,
Appeal by plaintiff from judgment entered 2 November 2006 by
Judge Donald W. Stephens in Wake County Superior Court. Heard in
the Court of Appeals 11 October 2007.
Hedrick Murray & Cheek, P.L.L.C., by Josiah S. Murray, III and
John C. Rogers, III, for plaintiff-appellant.
Bailey & Dixon, L.L.P., by Kenyann Brown Stanford and John T.
Crook, for defendant-appellees R. Edward McLaurin, Jr., PLLC,
and R. Edward McLaurin, Jr.
Young Moore and Henderson, P.A., by Walter E. Brock, Jr.
and Elinor M. Johnsey, for defendants Holmes & McLaurin
Where plaintiff's professional negligence claim was barred by
the statute of repose, the trial court did not err in dismissing
this claim pursuant to N.C. R. Civ. P. 12(b)(6). Fraudulent
conduct is not in the ordinary course of business of a law
partnership, and the trial court did not err in dismissing
plaintiff's claim of fraud as to McLaurin's partners.
I. Factual and Procedural Background
Since these matters were decided by the trial court on
defendants' motions to dismiss pursuant to Rules 12(b)(6) and 12(c)
of the Rules of Civil Procedure, both the trial court and this
court must treat the factual allegations contained in plaintiff's
complaint as true. See Cage v. Colonial Bldg. Co., 337 N.C. 682,
683, 448 S.E.2d 115, 116 (1994). The following are the facts as
alleged in plaintiff's complaint.
On 31 July 1992, David M. Goodman (plaintiff) was injured in
an automobile collision. Plaintiff hired the law firm of Holmes &
McLaurin (H&M Partnership) to represent him with respect to his
personal injury and property damage claims. Edward McLaurin, Jr.
(McLaurin) had primary responsibility for plaintiff's
representation and filed a complaint on 28 July 1995. On 21
October 1997, McLaurin filed a voluntary dismissal without
prejudice, without the knowledge or consent of plaintiff. When
McLaurin failed to re-file plaintiff's lawsuit within one year,
plaintiff's claims against the original tortfeasors were barred by
the three year statute of limitations pursuant to N.C. Gen. Stat.
.§ 1A-1, Rule 41(a) and 1-52(5). Following the filing of the voluntary dismissal, McLaurin took
affirmative steps to conceal his action, or lack of action, from
plaintiff. He advised plaintiff that the insurer of the
tortfeasors in the 1992 accident was St. David's Trust, located in
Barcelona, Spain. In fact, no such entity ever existed. McLaurin
advised plaintiff that he was negotiating a settlement with St.
David's Trust, and in June 2000, faxed a purported settlement
offer to plaintiff. This offer was rejected by plaintiff.
Subsequently, two further offers, supposedly made by St. David's
Trust, were submitted to plaintiff. Plaintiff eventually
accepted a settlement in the amount of $200,000. McLaurin
forwarded to plaintiff a Trust Memorandum allegedly from St.
David's Trust, dated 29 September 2000, showing that the settlement
would be paid in two installments of $100,000 on 31 December 2001
and 31 December 2002. The settlement was to be funded by St.
David's Trust or the Landau Foundation. Between January and July
of 2001, there were three transfers of funds from the H&M
Partnership's Trust Account to plaintiff's bank account, totaling
$25,000. McLaurin represented to plaintiff that these funds
represented interim payments by St. David's Trust to assist
plaintiff with his medical bills.
From 2001 through 2003, McLaurin continued to assure plaintiff
that he was still dealing with St. David's Trust to obtain the
monies provided for in the Trust Memorandum. In January 2004,
McLaurin sent plaintiff a copy of a purported complaint against the
original tortfeasors and St. David's Trust. The complaint soughtdamages from St. David's Trust for breach of the settlement
agreement and for unfair and deceptive trade practices. McLaurin
asked plaintiff to execute a verification of the complaint.
Plaintiff was told by McLaurin that the complaint had been filed.
When plaintiff pressed McLaurin for confirmation on the status of
this matter, McLaurin sent plaintiff a copy of an e-mail supposedly
from a lawyer in Spain.
On 11 December 2001, plaintiff was injured in a second
automobile accident. He hired the H&M partnership to represent him
with respect to his personal injury claim. In November 2005,
plaintiff learned for the first time of McLaurin's 1997 dismissal
of plaintiff's claims and his subsequent failure to re-file the
action within one year. Plaintiff also learned that McLaurin had
not filed suit against St. David's Trust.
On 9 May 2006 Plaintiff filed a complaint against defendants,
seeking to recover damages based upon the negligent and fraudulent
conduct of McLaurin, which plaintiff alleged was imputed to the
other defendants by virtue of their relationship with McLaurin.
The complaint asserted five causes of action: (1) negligence and
professional malpractice arising out of the handling of plaintiff's
1992 accident claim; (2) negligence and professional malpractice
arising out of the handling of plaintiff's 2001 accident claim; (3)
fraud arising out of the alleged cover-up of McLaurin's actions
concerning the 1992 accident; (4) gross negligence, including a
claim for punitive damages; and (5) breach of fiduciary duty. The
defendants included McLaurin, H&M Partnership, one of McLaurin'spartners, Edward S. Holmes (Holmes), and two successor law firms
created by McLaurin in 2003: the Holmes & McLaurin L.L.P. (the H&M
L.L.P.) and R. Edward McLaurin, Jr., P.L.L.C. (the McLaurin
On 16 August 2006, Holmes, the H&M Partnership, and the H&M
L.L.P. (hereinafter collectively referred to as the Holmes
defendants) filed a Rule 12(b)(6) motion to dismiss plaintiff's
claims against them on the grounds that plaintiff's claims were
barred by the statute of repose pursuant to N.C. Gen. Stat. . 1-
15(c). On 21 August 2006, McLaurin and the McLaurin PLLC
(hereinafter collectively referred to as the McLaurin defendants)
filed an answer to plaintiff's complaint, and on 22 September 2006
the McLaurin defendants filed a motion to dismiss the first, third,
fourth, and fifth causes of action pursuant to N.C. Gen. Stat. .
1A-1, Rules 12(b)(6) and 12(c).
On 2 November 2006, the trial court filed two orders. The
first order granted the McLaurin defendants' motion to dismiss
plaintiff's first, fourth, and fifth causes of action. The
McLaurin defendants' motion to dismiss as to the third cause of
action and the portion of the fourth cause of action asserting a
claim for punitive damages based upon conduct alleged in the third
cause of action was denied. The second order granted the Holmes
defendants' motion to dismiss as to all of plaintiff's claims.
On 29 November 2006, plaintiff dismissed without prejudice his
third cause of action and his claim for punitive damages against
the McLaurin defendants. On 22 December 2006, plaintiffvoluntarily dismissed without prejudice his negligence cause of
action arising out of the McLaurin defendants' legal representation
of his claim for the 2001 accident.
On 29 November 2006, plaintiff filed notice of appeal from
each of the trial court's orders. On 11 December 2006, the
McLaurin defendants filed notice of appeal as to the denial of
their motion to dismiss plaintiff's third cause of action and the
claim for punitive damages. On 22 December 2006, plaintiff filed
a second notice of appeal.
II. Motion to Dismiss Appeal
We first address the McLaurin defendants' motion to dismiss
plaintiff's appeal. The McLaurin defendants contend that, because
the trial court dismissed only some of plaintiff's claims, the
trial court's order is interlocutory and is not immediately
appealable. We disagree.
A judgment is either interlocutory or the final determination
of the rights of the parties. Curl v. Am. Multimedia, Inc.
N.C. App. ___, ___, 654 S.E.2d 76, 78 (2007) (quoting N.C. Gen.
Stat. § 1A-1, Rule 54(a) (2005)). An interlocutory order is one
made during the pendency of an action, which does not dispose of
the case, but leaves it for further action by the trial court in
order to settle and determine the entire controversy. Id.
(quoting Veazey v. Durham
, 231 N.C. 357, 362, 57 S.E.2d 377, 381
(1950)). Ordinarily, an appeal from an order granting summary
judgment to fewer than all of a plaintiff's claim is premature and
subject to dismissal. Combs & Assocs. v. Kennedy
, 147 N.C. App.362, 367, 555 S.E.2d 634, 638 (2001) (citation omitted). However,
[p]laintiff's voluntary dismissal of [the] remaining claim does
not make the appeal premature but rather has the effect of making
the trial court's grant of partial summary judgment a final order.
In the instant case, plaintiff voluntarily dismissed all of
the claims which survived the trial court's two orders of 2
November 2006. Thus plaintiff's claims were no longer
interlocutory, and any rationale for dismissing the appeal as
Defendant's rely on Hill v. West
, 177 N.C. App. 132, 627
S.E.2d 662 (2006) for the proposition that the voluntary dismissal
without prejudice of the surviving claims of a partial summary
judgment is not a final determination of the rights of the
parties, and cannot be used to render a partial summary judgment
The plaintiffs in Hill
appealed the trial court's order of
partial summary judgment twice. On the first appeal, this Court
concluded that the
appeal was interlocutory because plaintiffs'
claims against certain defendants remained pending. This Court
dismissed plaintiffs' appeal, and admonished plaintiffs for
violating Rule 28(b)(4) of the Rules of Appellate Procedure for
failing to include in their appellate brief a statement of the
grounds for appellate review. Id.
at 133, 627 S.E.2d at 663.
Following the dismissal of their appeal, plaintiffs
voluntarily dismissed their remaining claims without prejudice andagain appealed. On the second appeal, this Court concluded that
the merits of plaintiffs' appeal would not be reached because
plaintiffs again failed to include a statement of the grounds for
appellate review. The Hill
Court went on to state that the partial
summary judgment was interlocutory because plaintiffs remained at
liberty to re-file their voluntarily dismissed claims. Id.
36, 627 S.E.2d at 664.
Plaintiff argues, and we agree, that Hill
is not controlling.
is factually distinguishable from the instant case. Unlike
the plaintiffs in Hill
, plaintiff in the instant case followed the
Rules of Appellate Procedure. See Curl
at ___, 654 S.E.2d at 80
([T]he Court in Hill
stated several reasons for the dismissal,
including plaintiffs' repeated failure to comply with the North
Carolina Rules of Appellate Procedure, and the Court's perception
that the appellants were 'manipulating the Rules of Civil Procedure
in an attempt to appeal the 2003 summary judgment that otherwise
would not be appealable.').
We hold the trial court's order is not interlocutory and
plaintiff's appeal is properly before this Court. Defendants'
argument is without merit.
III. Dismissal of Plaintiff's Negligence Claim
In his first argument, plaintiff contends that the trial court
erred by concluding that plaintiff
could not use
to prevent McLaurin, the H&M Partnership, and Holmes from relying
on the statute of repose, and dismissing his first cause of actionfor negligence and professional malpractice against McLaurin, the
H&M Partnership, and Holmes. We disagree.
A. Standard of Review
The standard of review of an order allowing a Rule 12(b)(6)
motion is whether, as a matter of law, the allegations of the
complaint, treated as true, are sufficient to state a claim upon
which relief may be granted under some legal theory[.] Bowman v.
Alan Vester Ford Lincoln Mercury, 151 N.C. App. 603, 606, 566
S.E.2d 818, 821 (2002) (quotation omitted). The complaint should
be 'liberally construed, and the court should not dismiss the
complaint unless it appears beyond doubt that [the] plaintiff could
prove no set of facts in support of his claim which would entitle
him to relief.' State ex rel. Cooper v. Ridgeway Brands Mfg.,
L.L.C., 184 N.C. App. 613, 618, 646 S.E.2d 790, 795 (2007)
(quotation omitted). We evaluate all facts alleged and permissible
inferences therefrom in the light most favorable to plaintiff.
Stephenson v. Town of Garner, 136 N.C. App. 444, 447, 524 S.E.2d
608, 611 (2000).
B. Statute of Repose
N.C. Gen. Stat. § 1-15(c) governs legal malpractice claims,
and establishes a three-year statute of limitations and a four-year
statute of repose. Fender v. Deaton, 153 N.C. App. 187, 189, 571
S.E.2d 1, 2 (2002) (citation omitted). The statute provides in
[A] cause of action for malpractice arising
out of the performance of or failure to
perform professional services shall be deemed
to accrue at the time of the occurrence of thelast act of the defendant giving rise to the
cause of action. . . . [I]n no event shall an
action be commenced more than four years from
the last act of the defendant giving rise to
the cause of action[.]
N.C. Gen. Stat. . 1-15(c) (2007).
The North Carolina Supreme Court has articulated the
difference between a statute of limitations and a statute of
. . . the period contained in the statute of
repose begins when a specific event occurs,
regardless of whether a cause of action has
accrued or whether any injury has resulted. .
. . Thus, the repose serves as an unyielding
and absolute barrier that prevents a
plaintiff's right of action even before his
cause of action may accrue, which is generally
recognized as the point in time when the
elements necessary for a legal wrong coalesce.
Black v. Littlejohn, 312 N.C. 626, 633, 325 S.E.2d 469, 474-75
(1985) (internal citations omitted). A statute of repose creates
an additional element of the claim itself which must be satisfied
in order for the claim to be maintained. Hargett v. Holland, 337
N.C. 651, 654, 447 S.E.2d 784, 787 (1994) (citation omitted). If
the action is not brought within the specified period, the
plaintiff 'literally has no cause of action. The harm that has been
done is damnum absque injuria -- a wrong for which the law affords
no redress.' Id. (quotations omitted).
C. Equitable Estoppel
The issue presented is whether the courts can apply principles
of equity to circumvent the unyielding and absolute barrier of a
statute of repose. Plaintiff cites the cases of Wood v. BD&A Constr., L.L.C., 166
N.C. App. 216, 601 S.E.2d 311 (2004); Cacha v. Montaco, Inc., 147
N.C. App. 21, 554 S.E.2d 388 (2001); Bryant v. Adams, 116 N.C. App.
448, 448 S.E.2d 832 (1994); and One North McDowell Assn. v.
McDowell Development, 98 N.C. App. 125, 389 S.E.2d 834 (1990), for
the proposition that [e]quitable estoppel may . . . defeat a
defendant's statute of repose defense. Wood at 220, 601 S.E.2d at
The cases cited by plaintiff are inapplicable to the instant
case. Unlike plaintiff's professional malpractice claim, governed
by N.C. Gen. Stat. . 1-15(c), the cases cited by plaintiff dealt
with claims governed by N.C. Gen. Stat. . 1-50(a)(5), which
provides a six-year statute of repose for actions to recover
damages based upon or arising out of the defective or unsafe
condition of an improvement to real property . . . N.C. Gen.
Stat. . 1-50(a)(5) (2007). Subsection (e) of this statute
specifically states that the six year statute of repose shall not
be asserted as a defense by any person who shall have been guilty
of fraud, or willful or wanton negligence . . . or to any person
who shall wrongfully conceal any such fraud, or willful or wanton
N.C. Gen. Stat. . 1-15(c) contains no comparable exception to
its four year statute of repose. This Court has consistently
refused to apply equitable doctrines to estop a defendant from
asserting a statute of repose defense in the legal malpractice
context, and the line of cases addressing this issue specificallystate that G.S. § 1-15(c) contains a four year statute of repose,
and equitable doctrines do not toll statutes of repose. State ex
rel. Long v. Petree Stockton, L.L.P., 129 N.C. App. 432, 445, 499
S.E.2d 790, 798 (1998) (citing Stallings v. Gunter, 99 N.C. App.
710, 716, 394 S.E.2d 212, 216 (1990)); see also Hargett v. Holland,
337 N.C. 651, 447 S.E.2d 784 (1994); Teague v. Isenhower, 157 N.C.
App. 333, 579 S.E.2d 600 (2003); Fender v. Deaton, 153 N.C. App.
187, 571 S.E.2d 1 (2002); and Sharp v. Teague, 113 N.C. App. 589,
439 S.E.2d 792 (1994).
Plaintiff's reliance on Duke Univ. v. Stainback, 320 N.C. 337,
357 S.E.2d 690 (1987) is likewise misplaced. In Stainback, the
North Carolina Supreme Court held that the doctrine of equitable
estoppel could be invoked to bar a defendant from relying on a
statute of limitations. Id. at 341, 357 S.E.2d at 692. The Court
was not presented with a statute of repose issue, and the statute
of repose was not addressed in the opinion. Additionally, the
subsequent Supreme Court decision in Hargett v. Holland established
that the statute of repose is an element of the claim itself,
whereas the statute of limitations is an affirmative defense to
which estoppel may apply. See Hargett at 654-55, 447 S.E.2d at
787. Based upon this distinction, this Court has refused to apply
principles of equity to the bar imposed by the statute of repose
contained in N.C. Gen. Stat. . 1-15(c).
In the instant case, the facts show that on 21 October 1997,
McLaurin voluntarily dismissed without prejudice plaintiff's claims
arising from the 1992 accident. Rule 41(a) of the North CarolinaRules of Civil Procedure requires that any new action after a
voluntary dismissal be refiled within one year after the dismissal.
N.C. Gen. Stat. § 1A-1, Rule 41(a) (2007). Thus, the last
opportunity for McLaurin to act on plaintiff's claim occurred on 21
October 1998. Plaintiff brought his professional malpractice
action against McLaurin on 9 May 2006, nearly seven years after
McLaurin's last act. Thus, plaintiff's professional negligence
claim was barred by the statute of repose, and the trial court did
not err in dismissing plaintiff's claim.
We note that the actions of McLaurin, as alleged in
plaintiff's complaint, are particularly egregious. However, it is
for the legislature, and not the courts, to establish statutes of
limitations, statutes of repose, and any exceptions to those rules.
It is not the role of the courts to create exceptions to the laws
established by the legislature where the intent of the legislature
is made manifestly clear on the face of the statute. See Diaz v.
Div. of Soc. Servs., 360 N.C. 384, 389, 628 S.E.2d 1, 4-5 (2006).
This argument is without merit.
III. Partnership Law
In his second argument, plaintiff contends that the trial
court erred by refusing to apply settled principles of partnership
law to hold the Holmes defendants liable for the actions of
McLaurin, and dismissing plaintiff's claims against the Holmes
defendants. We disagree.
The Holmes defendants acknowledge that McLaurin's
representation of plaintiff for his claims associated with the 1992accident was with the authority of the partnership. They contend,
however, that the fraudulent concealment of McLaurin's negligence
took him outside the scope of any arguable agency of the firm and
went so far beyond a lawyer's legitimate role as to place it
outside the ordinary scope of business of a law partnership.
A partnership is liable for loss or injury caused by any
wrongful act or omission of any partner acting in the ordinary
course of business of the partnership or with the actual or
apparent authority of his copartners. Heath v. Craighill,
Rendleman, Ingle & Blythe, P.A., 97 N.C. App. 236, 241, 388 S.E.2d
178, 181 (1990); N.C. Gen. Stat. . 59-43 (2007). The rules
governing partnership tort liability are fully applicable to law
partnerships. Jackson v. Jackson, 20 N.C. App. 406, 407, 201
S.E.2d 722, 723 (1974). The general rule in this jurisdiction is
that a partner or officer cannot bind the partnership or
corporation beyond the normal scope of his authority. Zimmerman
v. Hogg & Allen, 22 N.C. App. 544, 546, 207 S.E.2d 267, 269, rev'd
on other grounds, 286 N.C. 24, 209 S.E.2d 795 (1974). Thus the
question at issue is whether a lawyer who engages in fraudulent
concealment of his professional negligence is acting in the
ordinary course of his law firm's business. See Jackson at 407,
201 S.E.2d at 723.
In Jackson, a law partnership was sued on the grounds that one
of the partners instituted a malicious prosecution. In determining
whether the attorney's conduct was within the scope of the
partnership, this Court noted that the Rules of ProfessionalConduct prohibit an attorney from instituting an action on behalf
of his client that he knows would merely serve to harass or
maliciously injure another. Id. at 408, 201 S.E.2d at 724. Based
on these rules, we concluded that malicious prosecution was not
within the ordinary course of business of a law partnership.
The Rules of Professional Conduct of the North Carolina State
Rule 1.4: Communication
(a) A lawyer shall:
(1) promptly inform the client of
any decision or circumstance
with respect to which the
client's informed consent . .
., is required by these Rules;
. . .
(3) keep the client reasonably
informed about the status of
(4) promptly comply with reasonable
requests for information
. . .
(b) A lawyer shall explain a matter to the
extent reasonably necessary to permit the
client to make informed decisions
regarding the representation.
As previously discussed, the statute of repose barred
plaintiff's claims for professional negligence and malpractice.
Thus, the only remaining claim for which the Holmes defendants
could be liable was McLaurin's fraudulent concealment of his
professional negligence. As in Jackson, the representation of a
plaintiff in a personal injury action is clearly within the normalrange of activities for a typical law partnership. However, fraud
associated with such representation, including the failure to keep
a client informed about the status of his or her case and the
active concealment of the true state of affairs, in violation of
the standards of the legal profession, is not in the ordinary
course of the partnership business. There is nothing in
plaintiff's complaint to suggest that the Holmes defendants
authorized, participated in, or even knew about McLaurin's
The trial court did not err in dismissing plaintiff's claims
against the Holmes defendants.
This argument is without merit.
In the McLaurin defendants' first cross-assignment of error,
they argue that the trial court erred in denying their motion to
dismiss the fraud claim in plaintiff's third cause of action on the
grounds that plaintiff sustained no actual damages as a result of
the alleged fraud.
As plaintiff voluntarily dismissed his fraud claim against the
McLaurin defendants, this claim is not before this Court. See
Brannock v. Brannock
, 135 N.C. App. 635, 523 S.E.2d 110 (1999).
We hold that this argument is without merit.
Judges BRYANT and GEER concur.
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