254 N.C. App. 348
N.C. Ct. App.2017Background
- Lake View Park subdivision deeds (1938, 1942) established assessments and a commission to hold Beaver Lake and adjacent property in trust for lot owners; commission incorporated in 1983.
- In 1996, then-commissioners executed a deed purporting to transfer the trust property to the incorporated Lake View Park Commission, Inc.; plaintiffs own lots adjacent to the lake.
- Plaintiffs sued in May 2015 seeking (1) cancellation of the 1996 deed, (2) declaratory relief invalidating assessments and compulsory membership, (3) constructive trust over funds, and (4) negligent misrepresentation/UDTPA relief.
- Defendants moved to dismiss under Rule 12(b)(6) arguing plaintiffs’ claims are barred by statutes of limitations; trial court granted the motion and denied Rule 60(b) relief; plaintiffs appealed.
- The appellate majority affirmed, holding the complaint on its face shows the applicable limitation periods expired (variously 3, 4, 7, or 10 years depending on the claim), so declaratory and equitable relief was unavailable.
- A dissent argued the trial court considered evidence outside the pleadings (converting the motion into summary judgment) without giving plaintiffs a reasonable opportunity under Rule 56, and therefore the dismissal should be reversed and remanded.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Validity of 1996 deed/possession of trust property | 1996 deed is invalid; Commission lacks lawful title | Commission has held and exercised possession and authority since incorporation/1996 | Dismissed — claim barred by property-possession statute (7-year) and limitations on trust challenges |
| Authority to levy assessments and amend rates | Commission lacked authority to collect or increase assessments beyond original deed terms | Commission empowered by deeds and articles to levy/collect assessments and has exercised that authority for decades | Dismissed — plaintiffs’ claims arise from long-ago acts and are time-barred (3- or 6-year limits apply) |
| Compulsory membership and applicability of corporate articles | Plaintiffs not bound by corporate articles; Commission lacks power to impose membership | Articles state all lot owners are members and Commission has acted as such | Dismissed — challenge rooted in long-standing governance; statute of limitations bars relief |
| Constructive trust / restitution of assessments | Assessments were wrongfully retained; constructive trust should be imposed | Any repudiation or wrongful act occurred years ago (1996 or earlier) | Dismissed — constructive trust claim barred by 10-year (or 3-year for express trust) limitation periods |
| Negligent misrepresentation & UDTPA | Defendants misrepresented authority and conduct actionable under UDTPA | Any actionable misrepresentations occurred long ago; claims time-barred | Dismissed — negligent misrepresentation (3-year) and UDTPA (4-year) statutes of limitation bar claims |
Key Cases Cited
- Kohn v. Moore Reg'l Hosp., 229 N.C. App. 19 (2013) (Rule 12(b)(6) tests legal sufficiency; allegations viewed as admitted)
- Grich v. Mantelco, LLC, 228 N.C. App. 587 (2013) (standards for dismissal under Rule 12(b)(6))
- Laster v. Francis, 199 N.C. App. 572 (2009) (statute-of-limitations defense may be raised on Rule 12(b)(6) when apparent on face of complaint)
- Ludlum v. State, 227 N.C. App. 92 (2013) (if limitations bar underlying claims, Declaratory Judgment Act provides no relief)
- Perry v. Bassenger, 219 N.C. 838 (1941) (possession statutes and limitations for actions to recover real property)
- Sandlin v. Weaver, 240 N.C. 703 (1954) (trustee’s disposition of trust property contrary to trust constitutes repudiation, starting limitations run)
- Page v. Lexington Ins. Co., 177 N.C. App. 246 (2006) (UDTPA claims governed by four-year statute of limitations)
- Snyder v. Freeman, 300 N.C. 204 (1980) (dismissal on statute-of-limitations ground may equate to entry of summary judgment when court considers matters outside pleadings)