Carle v. Wyrick, Robbins, Yates & Ponton, LLP
225 N.C. App. 656
| N.C. Ct. App. | 2013Background
- Plaintiffs, joint owners of East Coast Drilling and Blasting, engaged defendants to represent their personal interests in an ESOP monetization transaction.
- The plan involved sale of East Coast stock to an ESOP, an $8,000,000 one-day loan to East Coast, and the monetization of the sale price through qualified replacement securities (QRS).
- Plaintiffs alleged failures in due diligence, provision of inaccurate information, and failure to verify QRS existence, potentially enabling a Ponzi-like scheme by Derivium/Optech.
- Engagement letter limited defendants’ scope, explicitly excluding tax advice and financial feasibility opinions; plaintiffs later sought tax-related guidance from defendants.
- IRS notice in 2007 informed that QRS would not be exempt from capital gains taxes; plaintiffs later resolved outstanding taxes with IRS in 2010, with substantial deficiencies and penalties.
- suit was filed January 25, 2010 after prior procedural rulings; trial court granted summary judgment on professional negligence claim based on the statute of repose.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the claim is barred by the statute of repose | Plaintiffs contend accrual occurred in 2010 after IRS proceedings. | Defendants contend last negligent act occurred in 2005; action must be filed within four years of that act. | Barred by the statute of repose |
| Date of the last act giving rise to the claim | Last act could be after 2005 due to ongoing representation. | Last act occurred by June 2005 when the transaction was completed. | Last act was May–June 2005; filing in 2010 outside four-year repose |
| Whether continuing representation tolls the statute of repose | Continued advice post-2005 extended the period. | Continuing representation does not toll the four-year repose. | Continued representation does not toll the repose |
| Whether the engagement letter limited the scope of duty to exclude certain claims | Engagement letter did not bar claims about due diligence and tax consequences. | Engagement letter excluded tax advice and certain financial assessments; duties limited accordingly. | Engagement terms did not defeat analysis for last act and repose under controlling law |
Key Cases Cited
- Hargett v. Holland, 337 N.C. 651, 447 S.E.2d 784 (1994) (statute of repose governs last act, not accrual; continuing duty not tolled)
- Garrett v. Winfree, 120 N.C. App. 689, 463 S.E.2d 411 (1995) (determine last act from contractual relationship and completion of services)
- Chase Development Group v. Fisher, Clinard & Cornwell, PLLC, N.C. App. 710 S.E.2d 218 (2011) (continuing representation does not toll statute of repose)
- Teague v. Isenhower, 157 N.C. App. 333, 579 S.E.2d 600 (2003) (measuring limitations from last negligent acts; appellate representation not tolled)
- Goodman v. Holmes & McLaurin Attorneys at Law, 192 N.C. App. 467, 665 S.E.2d 526 (2008) (illustrates accrual and repose interplay under North Carolina law)
- Snipes v. Jackson, 69 N.C. App. 64, 316 S.E.2d 657 (1984) (distinguishes accrual for limitations versus repose)
- Ocean Hill Joint Venture v. North Carolina Dept. of Environment, Health and Natural Resources, 333 N.C. 318, 426 S.E.2d 274 (1993) ( accrual concepts; referenced in related statutory interpretation)