IN THE COURT OF APPEALS OF NORTH CAROLINA
No. COA16-481
Filed: 20 December 2016
Sampson County, No. 15 CVS 1210
DELVON R. GOODWIN, by and through his Guardian ad Litem, MELISSA I.
HALES, Plaintiff,
v.
FOUR COUNTY ELECTRIC CARE TRUST, INC , a/k/a FOUR COUNTY ELECTRIC
MEMBERSHIP CORPORATION, Defendant.
Appeal by Plaintiff from order entered 4 January 2016 by Judge Charles H.
Henry in Sampson County Superior Court. Heard in the Court of Appeals 5 October
2016.
Hedrick Gardner Kincheloe & Garofalo, LLP, by Patricia P. Shields and
Joshua D. Neighbors, and Law Offices of Wade E. Byrd, P.A., by Wade E. Byrd,
for Plaintiff-Appellant.
Young Moore and Henderson, P.A., by Dana H. Hoffman, for Defendant-
Appellee.
DILLON, Judge.
Plaintiff appeals from the trial court’s order denying his motion to amend the
summons and complaint and granting Four County Electric Care Trust, Inc.’s motion
to dismiss the action. For the following reasons, we affirm.
I. Background
GOODWIN V. FOUR COUNTY ELECTRIC CARE
Opinion of the Court
The issues on appeal in this matter concern the North Carolina Rules of Civil
Procedure. The crux of this matter is whether Plaintiff sued the right entity for
injuries sustained on 30 October 2012 after he came into contact with a power line
regulator owned by “Four County Electric Membership Corporation,” an electric
membership cooperative (the “Membership Co-Op”).
On 29 October 2015, almost three years after the accident, a guardian ad litem
was appointed for Plaintiff, who commenced this action that same day.1 In the body
of the complaint, Plaintiff did not allege that the regulator was owned by the
Membership Co-Op; rather, Plaintiff alleged that the regulator was owned by a
different entity, “Four County Electric Care Trust, Inc.” (the “Non-Profit Trust” or
“Defendant”). In the caption of the summons and the complaint, Plaintiff designated
the defendant as a single entity, using an assumed name which incorporated the
names of both the Membership Co-Op and the Non-Profit Trust as follows: “Four
County Electric Care Trust, Inc. a/k/a Four County Electric Membership
Corporation.”
Defendant, the Non-Profit Trust, moved to dismiss Plaintiff’s action pursuant
to Rule 12(b)(2), (4), (5), and (6) of the North Carolina Rules of Civil Procedure,
contending that it did not own the regulator, but rather Membership Co-Op owned it.
At the Rule 12 motions hearing, Plaintiff orally moved to amend the complaint and
1 The complaint alleged that Plaintiff was incompetent at the time of the accident.
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GOODWIN V. FOUR COUNTY ELECTRIC CARE
Opinion of the Court
summons to alter the assumed name in the caption to “Four County Electric
Membership Corporation,” averring that the amendment constituted the correction
of a misnomer, not the addition of a new party. The Membership Co-Op never made
an appearance in this action.
By order entered 4 January 2016, the trial court granted the Non-Profit
Trust’s motion to dismiss and denied Plaintiff’s motion to amend its complaint and
summons. Plaintiff timely filed a notice of appeal.
II. Appellate Jurisdiction over Ruling Denying Oral Motion to Amend
Plaintiff contends on appeal that the trial court erred in its 4 January 2016
order by (1) granting the Non-Profit Trust’s motion to dismiss and (2) denying
Plaintiff’s motion to amend the summons and complaint.
Before addressing Plaintiff’s arguments on appeal, we must first determine
whether Plaintiff properly noticed an appeal from both portions of the trial court’s
order. Though Plaintiff states in his notice that he was appealing the 4 January 2016
order, he only references that portion granting Defendant’s motion to dismiss. The
notice fails to reference the portion denying Plaintiff’s motion to amend. Specifically,
Plaintiff’s notice of appeal states as follows:
[Plaintiff] hereby gives notice of appeal to the Court of
Appeals of North Carolina from the Order signed on
December 22, 2015 and file-stamped/entered on January 4,
2016 in the Superior Court of Sampson County, granting
Defendant’s Motion to Dismiss the above-captioned matter.
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GOODWIN V. FOUR COUNTY ELECTRIC CARE
Opinion of the Court
Accordingly, Defendant argues that we lack jurisdiction to consider any issue
concerning the denial of Plaintiff’s motion to amend. Guided by our decision in Evans
v. Evans, 169 N.C. App. 358, 610 S.E.2d 264 (2005), we conclude that both portions of
the 4 January 2016 order are properly before us.
Our Court has interpreted Rule 3 of our Rules of Appellate Procedure to
require that “an appellant . . . appeal from each part of the judgment or order
appealed from which appellant desires the appellate court to consider.” Foreman v.
Sholl, 113 N.C. App. 282, 291, 439 S.E.2d 169, 175 (1994) (internal quotation marks
omitted). However, we have also held that “a mistake in designating the judgment,
or in designating the part appealed from if only a part is designated, should not result
in loss of the appeal as long as the intent to appeal from a specific judgment can be
fairly inferred from the notice and the appellee is not mislead [sic] by the mistake.”
Smith v. Indep. Life Ins. Co., 43 N.C. App. 269, 274, 258 S.E.2d 864, 867 (1979)
(emphasis added) (internal quotation marks omitted).
Our Evans decision is remarkably similar to the present case. In Evans, the
appellant gave notice of appeal from “the Order entered on December 18, 2001 . . .
denying Defendant’s claim for child custody and child support.” Evans, 169 N.C. App.
at 363, 610 S.E.2d at 269 (internal quotation marks omitted). On appeal, the
appellant also sought review of the portion of the same order denying her request for
post-separation support. Id. The appellee argued that we lacked jurisdiction to
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GOODWIN V. FOUR COUNTY ELECTRIC CARE
Opinion of the Court
consider the post-separation determination since the appellant’s notice only
referenced the child custody/support portion of the order. Id. We held that, based on
these facts, “it is readily apparent that [the appellant] is appealing from the order
dated 18 December 2001 which addresses not only child custody and support but also
post-separation support. . . . Therefore, this Court has jurisdiction to consider [the
appellant’s] appeal of these additional issues.” Id.
Here, we can infer from Plaintiff’s notice of appeal his intent to challenge the
denial of his motion to amend the complaint and summons. His notice of appeal
specifically references the 4 January 2016 order which addressed both the Non-Profit
Trust’s motion to dismiss and Plaintiff’s motion to amend. See id. There is no
indication that the Non-Profit Trust has been misled by Plaintiff’s inadvertent
omission of the motion to amend ruling from the notice of appeal. See Smith, 43 N.C.
App. at 274, 258 S.E.2d at 867. Nor could there be as Plaintiff’s sole, viable ground
for appeal is that he should be allowed to amend the complaint and summons to
include the defendant’s proper name. Accordingly, we conclude that we have
jurisdiction to review the trial court’s denial of Plaintiff’s motion to amend along with
the trial court’s grant of the Non-Profit Trust’s motion to dismiss.
III. Analysis
A. Plaintiff’s Motion to Amend
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GOODWIN V. FOUR COUNTY ELECTRIC CARE
Opinion of the Court
We first address whether the trial court erred in denying Plaintiff’s oral motion
to amend the summons and complaint to change the designation of the defendant in
the caption from “Four County Electric Care Trust, Inc. a/k/a Four County Electric
Membership Corporation” to “Four County Electric Membership Corporation.”
Plaintiff argues that this erroneous designation is merely a misnomer of the
Membership Co-Op.
The Non-Profit Trust essentially argues that the designation in the caption, at
best, identifies it as the sole defendant and that the summons was directed at and
served upon it alone, and not upon the Membership Co-Op. Therefore, the Non-Profit
Trust contends that the trial court was correct in its ruling because the trial court
could not obtain jurisdiction over an entity that was not named or served (the
Membership Co-Op) merely by amending the moniker on the summons and
complaint. Indeed, both the summons and complaint identify and were served upon
a different entity (the Non-Profit Trust).
Our Supreme Court has stated that an amendment to the summons and
complaint may be allowed to correct a misnomer or mistake in the name of the party,
but that such motion to amend must be denied “where the amendment amounts to a
substitution or entire change in parties.” Bailey v. McPherson, 233 N.C. 231, 235, 63
S.E.2d 559, 562 (1951). See also Harris v. Maready, 311 N.C. 536, 546, 319 S.E.2d
912, 918 (1984) (restating same general principle).
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GOODWIN V. FOUR COUNTY ELECTRIC CARE
Opinion of the Court
Here, we hold that the amendment sought by Plaintiff amounted to a
substitution of parties. The summons was directed to the Non-Profit Trust, not the
Membership Co-Op; specifically, the summons contained additional language which
erroneously provided that the Non-Profit Trust was also known as the “Four County
Electric Membership Corporation.” Further, the body of the complaint never alleges
any facts concerning the Membership Co-Op, but rather alleges that the power line
regulator was owned, operated, and maintained by the Non-Profit Trust. We
conclude that there is no confusion that the summons and complaint were directed to
the Non-Profit Trust. Therefore, the trial court did not err in denying Plaintiff’s
motion to amend.
Our resolution of this issue is controlled by Crawford v. Aetna Cas. & Sur. Co.,
44 N.C. App. 368, 261 S.E.2d 25 (1979). In Crawford, the plaintiff sued “Michigan
Tool Company, a Division of Ex-Cell-O Corporation” under the erroneous belief that
Michigan Tool Company was part of Ex-Cell-O Corporation instead of a separate legal
entity. Id. at 368, 261 S.E.2d at 26. After the statute of limitations had expired, the
plaintiff then learned that Michigan Tool Company was in fact a subsidiary of Ex-
Cell-O Corporation and that Ex-Cell-O Corporation and Michigan Tool Company
were in fact two separate entities. Id. at 369, 261 S.E.2d at 26. The plaintiff then
sought to amend the summons and complaint to reflect that Ex-Cell-O Corporation
was the proper defendant, contending that the designation in the original summons
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GOODWIN V. FOUR COUNTY ELECTRIC CARE
Opinion of the Court
and complaint was a mere misnomer. Id. However, this Court, relying on precedent
from our Supreme Court, held that the designation was not a misnomer and that the
amendment should not be allowed even if the summons and complaint in fact reached
the hands of someone at Ex-Cell-O Corporation:
In the case before us, we are dealing with two separate
legal entities, Michigan Tool Company and Ex-Cell-O
Corporation. Complaint and summons directed to a
defendant named as “MICHIGAN TOOL COMPANY, A
Division of Ex-Cell-O Corporation” is not service on the
entity Ex-Cell-O Corporation even if the complaint and
summons reach the hands of someone obligated to receive
service in behalf of Ex-Cell-O.
Id. at 370, 261 S.E.2d at 27 (alteration in original).
Much like the plaintiff in Crawford, Plaintiff believed that the Non-Profit
Trust was also known by the name of “Four County Electric Membership
Corporation,” when in fact the Non-Profit Trust and the Membership Co-Op are two
separate legal entities. Accordingly, based on our holding in Crawford, we conclude
that the amendment sought by Plaintiff would have had the effect of adding the
Membership Co-Op as a new party.
We are also persuaded by our Supreme Court’s decision in McLean v. Matheny.
240 N.C. 785, 84 S.E.2d 190 (1954). In that case, the plaintiff sued “W.B. Matheny,
trading as Matheny Motor Company.” Id. at 785, 84 S.E.2d at 190. The plaintiff later
moved to amend his complaint to add “Matheny Motor Company, Inc.,” realizing that
the Company was a legal entity, separate and distinct from Mr. Matheny. Id. at 786,
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GOODWIN V. FOUR COUNTY ELECTRIC CARE
Opinion of the Court
84 S.E.2d at 191. The Supreme Court held that the plaintiff could not add the
corporation by merely amending the moniker used in the summons and complaint
since the proposed amendment would add a new party. Id. at 787, 84 S.E.2d at 191-
92. In the same way, here, Plaintiff is not seeking to correct a moniker, but rather is
seeking to add a different entity.
In conclusion, Plaintiff sought to bring in the Membership Co-Op as a
defendant by amending the summons and complaint which were issued and served
on the Non-Profit Trust. Plaintiff’s motion to amend was filed on the basis that the
Membership Co-Op was already a named party, and that any potential error in the
designation of the defendant in the summons and complaint was merely a misnomer.
Plaintiff characterized his motion as such – rather than as a motion to add a new
party – presumably out of concern that the Membership Co-Op, as a new party, would
have a statute of limitations defense if the Membership Co-Op challenged Plaintiff’s
allegations of incompetency. Were the motion to amend be on the basis of a
misnomer, rather than the addition of a new party, such motion would relate back to
29 October 2015, the date of filing for the original complaint. We make no
determination as to whether the statute of limitations has indeed run on Plaintiff’s
claims against the Membership Co-Op. We simply conclude that the Membership Co-
Op has not been sued in this action, nor has Plaintiff made any attempt to add the
Membership Co-Op through any motion to add it as a party.
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GOODWIN V. FOUR COUNTY ELECTRIC CARE
Opinion of the Court
B. Defendant’s Motion to Dismiss
The trial court granted the Non-Profit Trust’s motion to dismiss pursuant, in
part, to Rule 12(b)(6) of our Rules of Civil Procedure. In granting the motion, the trial
court not only considered the four corners of Plaintiff’s complaint, but also two
affidavits offered by the Non-Profit Trust which established that (1) the Membership
Co-Op and the Non-Profit Trust are two separate, distinct legal entities and (2) the
power line regulator is owned, operated, and maintained by the Membership Co-Op
and not by the Non-Profit Trust.
Rule 12 provides that if matters outside the pleading are presented and
considered by the court on a Rule 12(b)(6) motion, “the motion shall be treated as one
for summary judgment and disposed of as provided in Rule 56[.]” N.C. Gen. Stat. §
1A-1, Rule 12(b). In the hearing below, Plaintiff did not object to the introduction of
the affidavits. We note that the complaint alleging that the Non-Profit Trust owns
the regulator was not verified. Further, Plaintiff presented no evidence to contradict
the affidavits, but rather sought to amend his summons and complaint to reflect that
the Membership Co-Op was the correct entity. Moreover, on appeal, Plaintiff
concedes that the power line regulator is owned, operated, and maintained by the
Membership Co-Op and that the Non-Profit Trust was not the correct party.
Therefore, the only evidence before the trial court concerning the ownership of the
power line regulator was in the form of the affidavits offered by Defendant.
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GOODWIN V. FOUR COUNTY ELECTRIC CARE
Opinion of the Court
Accordingly, the trial court did not err in dismissing the claims against the Non-Profit
Trust as there was no genuine issue of fact as to the Non-Profit Trust’s lack of
responsibility for Plaintiff’s injuries.
IV. Conclusion
Plaintiff’s error was not a misnomer; rather, Plaintiff sued the wrong party.
The trial court properly denied Plaintiff’s motion to amend based on a misnomer.
Further, the trial court did not err in granting Defendant’s motion to dismiss.
AFFIRMED.
Judge ELMORE concurs. Judge HUNTER, JR., concurs in the result and
writes separately.
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No. COA16-481 – Goodwin v. Four County Electric Care
HUNTER, JR., Robert N., Judge, concurring in the result.
When a litigant has been adjudged incompetent, he becomes a ward of the
court. Perry v. Jolly, 259 N.C. 305, 314 130 S.E.2d 654, 661 (1963); In re Estate of
Armfield, 113 N.C. App. 467, 439 S.E.2d 216 (1994). Here, it is alleged the plaintiff
was mentally incompetent before the occurrence leading to his injury and was further
catastrophically injured after the accident. On this basis, the Clerk appointed a
guardian ad litem for him as “an Incompetent Person.” This finding is
uncontroverted.
Plaintiff’s status as an incompetent commits his legal rights “to the care of the
court” as well as their attorneys. Elledge v. Welch, 238 N.C. 61, 68, 76 S.E.2d 340,
345 (1953). The duty to protect those who have been adjudged incompetent extends
beyond the trial courts to the appellate courts. See id. (exercising supervisory power
to assume jurisdiction without an appeal and review errors committed against an
incompetent defendant).
Because judges have an obligation to incompetents to ensure their legal rights,
so as to avoid additional needless litigation in the future, I write separately to
question why this case is before us.
Plaintiff does not dispute he named the wrong defendant in his complaint.
However, the parties and the trial court appear to have proceeded under the
misimpression of law that the statute of limitations on Plaintiff’s claim had expired,
leaving Plaintiff unable to file a new complaint against the proper defendant.
GOODWIN V. FOUR COUNTY ELECTRIC CARE
HUNTER JR., J., concurring.
Because the majority declines to address the statute of limitations issue, not only
does it leave Plaintiff’s underlying negligence claim, like Schrödinger’s cat, in a state
where it may be alive or dead,2 but it fails to disabuse all concerned of the notion that
an amendment to Plaintiff’s complaint would need to relate back to the date of filing
under North Carolina Rule of Civil Procedure 15(c).
While the majority focuses on whether Plaintiff’s error constituted a mere
misnomer or a fatal defect, it elides the fact that this analysis is appropriate only
when the statute of limitations has expired. See Franklin v. Winn Dixie Raleigh, 117
N.C. App. 28, 38, 450 S.E.2d 24, 31 (1994), aff’d per curiam, 342 N.C. 404, 464 S.E.2d
46 (1995). Thus, I would like to make it clear the cat is alive; the statute of limitations
has not yet expired on Plaintiff’s negligence claim. As a result, the trial court was
free to exercise its discretion to grant Plaintiff’s motion to amend. However, neither
the trial court’s judgment nor our affirmance should not bar future litigation on the
merits of his claim.
Under the North Carolina Rules of Civil Procedure, a party may amend a
pleading after the opposing party files a responsive pleading “only by leave of court
or by written consent of the adverse party; and leave shall be freely given when justice
so requires.” N.C. Gen. Stat. § 1A-1, Rule 15(a) (2015). Motions to amend are
addressed to the discretion of the trial court. Henry v. Deen, 310 N.C. 75, 82, 310
2 See Ervin Schrödinger, Die gegenwärtige Situation in der Quantenmechanik, Die
Naturwissenschaften, Vol 23, Issue 48, pp. 807-812 (1935).
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GOODWIN V. FOUR COUNTY ELECTRIC CARE
HUNTER JR., J., concurring.
S.E.2d 326, 331 (1984). In exercising its discretion, the trial court “should be liberal
in . . . allowance and application.” Roper v. Thomas, 60 N.C. App. 64, 68, 298 S.E.2d
424, 427 (1982). Generally, “[a]mendments should be freely allowed unless some
material prejudice to the other party is demonstrated[.]” Mauney v. Morris, 316 N.C.
67, 72, 340 S.E.2d 397, 400 (1986).
Amendment to substitute a party is within the scope of the rule, although doing
so represents the creation of “a new and independent [cause] of action and cannot be
permitted when the statute of limitations has run.” Callicut v. American Honda
Motor Co., 37 N.C. App. 210, 212, 245 S.E.2d 558, 560 (1978) (quoting Kerner v.
Rockmill, 111 F. Supp. 150, 151 (M.D. Pa. 1953)).
If the statute of limitations has expired in the interim between the filing and
the amendment, a plaintiff may preserve his claim only if the amendment can be said
to relate back to the date of the original claim, under Rule 15(c):
A claim asserted in an amended pleading is deemed to have
been interposed at the time the claim in the original
pleading was interposed, unless the original pleading does
not give notice of the transactions, occurrences, or series of
transactions or occurrences, to be proved pursuant to the
amended pleading.
N.C. Gen. Stat. § 1A-1, Rule 15(c) (2015); Winn Dixie Raleigh, 117 N.C. App. at 38,
450 S.E.2d 30. A complaint will relate back with respect to a new defendant “if that
new defendant had notice of the claim so as not to be prejudiced by the untimely
amendment.” Winn Dixie Raleigh, 117 N.C. App. at 39, 450 S.E.2d at 31 (citation
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GOODWIN V. FOUR COUNTY ELECTRIC CARE
HUNTER JR., J., concurring.
omitted). Where the plaintiff has merely made a “mistake in name; giving incorrect
name to person in accusation, indictment, pleading, deed or other instrument,” Liss
v. Seamark Foods, 147 N.C. App. 281, 285, 555 S.E.2d 365, 368 (2001), we have found
it is permissible to amend the complaint to correct such a misnomer. Piland v.
Hertford County Bd. of Comm’rs, 141 N.C. App. 293, 299, 539 S.E.2d 669, 673 (2000).
Otherwise, the statute of limitations will bar the new claim. Winn Dixie Raleigh, 117
N.C. App. at 39, 450 S.E.2d at 31. Thus, the question of whether the plaintiff’s error
constitutes a misnomer or a fatal error need be reached only if the statute of
limitations has expired.
N.C. Gen. Stat. § 1-52(16) sets the statute of limitations at three years for
personal injury cases. No period of repose applies to personal injury cases. See N.C.
Gen. Stat. § 1-15(c) (2015) (setting periods of repose for certain malpractice cases).
State law tolls the statute of limitations for plaintiffs who were disabled when
the cause of action accrued:
A person entitled to commence an action who is under a
disability at the time the cause of action accrued may bring
his or her action within the time limited in this Subchapter,
after the disability is removed, except in an action for the
recovery of real property, or to make an entry or defense
founded on the title to real property, or to rents and
services out of the real property, when the person must
commence his or her action, or make the entry, within
three years next after the removal of the disability, and at
no time thereafter.
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GOODWIN V. FOUR COUNTY ELECTRIC CARE
HUNTER JR., J., concurring.
N.C. Gen. Stat. § 1-17(a) (2015). See also N.C. Gen. Stat. § 1-20 (2015) (“No person
may avail himself of a disability except as authorized in G.S. 1-19, unless it existed
when his right of action accrued.”)
A person is considered disabled if they meet one or more of the following
conditions: (1) the person is within the age of 18 years; (2) the person is insane; or (3)
the person is incompetent as defined in N.C. Gen. Stat. § 35A-1101(7) or (8). N.C.
Gen. Stat. § 1-17(a) (2015). An “incompetent adult” is one who “lacks sufficient
capacity to manage the adult’s own affairs or to make or communicate important
decisions concerning the adult’s person, family, or property whether the lack of
capacity is due to mental illness, mental retardation, epilepsy, cerebral palsy, autism,
inebriety, senility, disease, injury, or similar cause or condition.” N.C. Gen. Stat. §
35A-1101(7) (2015).
If the statute of limitations has been tolled due to the plaintiff’s disability, it
“begins to run upon the appointment of a guardian or upon the removal of his
disability as provided by G.S. 1-17, whichever shall occur first.” First-Citizens Bank
& Trust Co. v. Willis, 257 N.C. 59, 62, 125 S.E.2d 359, 361 (1962). See also Bryant v.
Adams, 116 N.C. App. 448, 459, 448 S.E.2d 832, 837 (1994).
Here, according to his complaint, Plaintiff “was a deaf, mentally incompetent
individual without any other physical impairment” when his action against Four
County Electric Membership Corporation accrued. The trial court must assume the
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GOODWIN V. FOUR COUNTY ELECTRIC CARE
HUNTER JR., J., concurring.
facts in the pleading are true when ruling on a motion to dismiss under Rule 12(b)(6).
White v. White, 296 N.C. 661, 667, 252 S.E.2d 698, 702 (1979). Thus, “a statute of
limitation or repose may be the basis of a 12(b)(6) dismissal [only] if on its face the
complaint reveals the claim is barred.” Forsyth Memorial Hosp. v. Armstrong World
Indus., 336 N.C. 438, 442, 444 S.E.2d 423, 426 (1994). As a result, when there is an
evidentiary dispute, the statute of limitations defense is not properly within the trial
court’s scope of review on a 12(b)(6) motion to dismiss. White, 296 N.C. at 667, 252
S.E.2d at 702.
Thus, because the trial court was required to assume that the statute of
limitations was tolled in this case, it need not have considered whether Plaintiff’s
amendment related back to the date of filing. The relevant inquiry was only whether
Plaintiff’s amendment was proper under Rule 15(a). Consequently, the trial court
was free to exercise its discretion to grant or deny Plaintiff’s motion to amend without
deciding whether the amendment related back to the original complaint.
Nevertheless, the trial court’s decision to deny the motion and dismiss the
complaint against Four County Electric Care Trust with prejudice does not prevent
Plaintiff from refiling his complaint against the proper defendant. Under North
Carolina Rule of Civil Procedure 41(b), dismissal with prejudice operates as an
adjudication on the merits unless otherwise specified by the trial court. N.C. Gen.
Stat. § 1A-1, Rule 41(b) (2015). Moreover, “[d]ismissal with prejudice ends the
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GOODWIN V. FOUR COUNTY ELECTRIC CARE
HUNTER JR., J., concurring.
lawsuit and precludes subsequent litigation on the same controversy between the
parties under the doctrine of res judicata.” 2 G. Gray Wilson, North Carolina Civil
Procedure § 41-5 (3d ed. 2007). When a case is dismissed with prejudice under Rule
41(b), the trial court must make findings of fact and state conclusions of law so as to
“make definite what was decided for the purpose of res judicata and estoppel.” Helms
v. Rea, 282 N.C. 610, 619, 194 S.E.2d 1, 7 (1973). While the trial court’s order does
state findings of fact and conclusions of law, its language is incomplete as to future
litigation against the true property owner.
The doctrine of res judicata provides “a final judgment on the merits in a prior
action in a court of competent jurisdiction precludes a second suit involving the same
claim between the same parties or those in privity with them.” 2 G. Gray Wilson,
North Carolina Civil Procedure § 88-1 (3d ed. 2007). In order to invoke res judicata
as a defense, the proponent must show: “(1) a final judgment on the merits in an
earlier suit; (2) an identity of the cause of action in both the earlier and the later suit;
and (3) an identity of parties or their privities in the two suits.” State ex rel. Utilities
Com. v. Thornburg, 325 N.C. 463, 468, 385 S.E.2d 451, 453-54 (1989) (citation
omitted).
Thus, res judicata will only prevent “a second suit based on the same cause of
action between the same parties or those in privity with them.” Thomas M. McInnis
& Associates, Inc. v. Hall, 318 N.C. 421, 428, 349 S.E.2d 552, 556 (1986) (emphasis
7
GOODWIN V. FOUR COUNTY ELECTRIC CARE
HUNTER JR., J., concurring.
added). This Court has recently held in the context of res judicata, “privity involves
a person so identified in interest with another that he represents the same legal
right.” Williams v. Peabody, 217 N.C. App. 1, 8, 719 S.E.2d 88, 94 (2011). More
specifically, “privity denotes a mutual or successive relationship to the same rights of
property.” Id. (quoting Whitacre P’Ship v. BioSignia, Inc., 358 N.C. 1, 36, 591 S.E.2d
870, 893 (2004)).
In the instant case, although the trial court dismissed the suit with prejudice,
they did so precisely because the wrong defendant had been sued, noting in its order
“Four County Electric Care Trust, Inc. does not own any property or electric
equipment and the regulator identified in Plaintiff’s complaint was owned, operated
and maintained by a different company.” As a result, the trial court’s order makes
clear the Four County Electric Care Trust and the Four County Electric Membership
Corporation are two separate entities who have no “mutual or successive
relationship” with regard to the equipment at hand. Thus, the Corporation cannot
invoke res judicata as a defense to a suit alleging the same cause of action in this
case.
Similar to res judicata, collateral estoppel “is designed to prevent repetitious
lawsuits over matters which have once been decided and which have remained
substantially static, factually and legally.” King v. Grindstaff, 284 N.C. 348, 356, 200
S.E. 2d 799, 805 (1973). Thus, “the determination of an issue in a prior judicial or
8
GOODWIN V. FOUR COUNTY ELECTRIC CARE
HUNTER JR., J., concurring.
administrative proceeding precludes the relitigation of that issue in a later action,
provided the party against whom the estoppel is asserted enjoyed a full and fair
opportunity to litigate that issue in the earlier proceeding.” Whitacre P’Ship v.
BioSignia, Inc., 358 N.C. 1, 15, 591 S.E.2d 870, 880 (2004).
A party asserting collateral estoppel must show (1) the earlier suit resulted in
a final judgment on the merits; (2) the “issue in question was identical to an issue
actually litigated and necessary to the judgment;” and (3) both parties or their
privities were parties in the earlier suit. State ex rel. Tucker v. Frinzi, 344 N.C. 411,
414, 474 S.E.2d 127, 128-29 (1996) (emphasis added) (citation omitted).
Traditionally, as with res judicata, collateral estoppel applied only between the
parties or those in privity with them. McInnis, 318 N.C. at 429, 349 S.E.2d at 557.
However, for “defensive” uses of collateral estoppel, our courts have rejected the
“mutuality” requirement that both parties must be bound by the prior judgment. Id.
at 434-35, 349 S.E.2d at 560. Thus, collateral estoppel may apply even where only
the plaintiff is bound by a prior judgment on the merits.
However, an issue is only “actually litigated, for purposes of collateral estoppel
or issue preclusion, if it is properly raised in the pleadings or otherwise submitted for
determination and [is] in fact determined.” City of Asheville v. State, 192 N.C. App.
1, 17, 665 S.E.2d 103, 117 (2008), appeal dismissed, disc. review denied, 363 N.C. 123,
672 S.E.2d 685 (2009). This determination requires “[a] very close examination of
9
GOODWIN V. FOUR COUNTY ELECTRIC CARE
HUNTER JR., J., concurring.
matters actually litigated . . . . If they are not identical, then the doctrine of collateral
estoppel does not apply.” Id.
In the instant case, although the dismissal of the suit against the Trust
operates as a decision on the merits, the trial court’s findings of fact and conclusions
of law pertain only to the identity of the defendant. Thus, the court’s order is clear
these two parties are not “in privity.” Had they been, a different result would have
obtained. Further, the language of the order demonstrates the parties have not
“actually litigated” the substance of Plaintiff’s negligence claim. As a result, if
Plaintiff were to bring suit against the Corporation, rather than the Trust, the
Corporation could not use collateral estoppel to bar the suit, as the plaintiff’s
negligence claim has not yet been litigated.
10