Christenbury Eye Ctr., P.A. v. Medflow, Inc.
2017 N.C. LEXIS 554
| N.C. | 2017Background
- Christenbury Eye Center (plaintiff) assigned software enhancement rights to Medflow and Riggi in October 1999 in exchange for royalties, monthly sales reports, and restrictions on sales in NC/SC.
- Agreement required a $500 minimum annual royalty for the first five years and monthly reporting of fees and payments.
- Defendants never provided reports, never paid royalties (including the first $500 due Oct. 20, 2000), and allegedly sold enhancements in restricted territories beginning in 1999.
- Plaintiff continued using the software and received updates but did not inquire about reports, royalties, or restricted sales for roughly 14 years.
- Plaintiff filed suit on Sept. 22, 2014 asserting breach of contract, fraud (fraudulent concealment), unfair/deceptive trade practices, and unjust enrichment.
- Trial court dismissed under Rule 12(b)(6) as time-barred; Supreme Court granted certiorari and affirmed dismissal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether claims are barred by statutes of limitations | Christenbury argued the suit was timely because the Agreement should be treated as an installment contract and each missed payment/report creates a new limitations period | Defendants argued plaintiff had notice of breach in 1999–2000 and claims accrued then, so limitations expired long before 2014 filing | Held: Claims time-barred; plaintiff had notice by Nov. 1999 (or latest Oct. 2000) and waited ~14 years |
| Whether the Agreement is an installment (divisible) contract | Christenbury urged installments rule; each unpaid royalty/report is a separate claim | Defendants contended the Agreement was a single, indivisible assignment with unified consideration | Held: Agreement is entire/unified, not an installment contract; consideration not apportionable |
| Whether repudiation or waiver restarted limitations | Plaintiff suggested ongoing nonpayment or concealment tolled or created successive breaches | Defendants pointed to repeated failures as repudiation that put plaintiff on notice; trial court noted potential waiver if treated as installment contract | Held: Defendants’ repeated nonperformance constituted repudiation by 2000, starting the limitations clock; waiver theory irrelevant to revive claims |
| Accrual rule for related tort and contract claims (fraud, UDTP, unjust enrichment) | Plaintiff argued concealment/fraud might toll accrual | Defendants argued plaintiff’s complaint shows plaintiff knew of injuries long ago so none tolled accrual | Held: Fraud/fraudulent concealment/unjust enrichment and UDTP accrued when injury was apparent; statutes ran (3-year and 4-year limitations) |
Key Cases Cited
- Shearin v. Lloyd, 246 N.C. 363 (statutes of limitations require timely suit)
- Teachey v. Gurley, 214 N.C. 288 (statute of limitations runs when repudiation notifies party to assert rights)
- Pembee Mfg. Corp. v. Cape Fear Constr. Co., 313 N.C. 488 (limitations begin when injury is or should reasonably be apparent)
- Williams v. Blue Cross Blue Shield of N.C., 357 N.C. 170 (continued injury may be aggravation of original wrong; statutes run from original breach)
- Martin v. Ray Lackey Enters., 100 N.C. App. 349 (installment-contract rule: statute runs against each installment as it becomes due)
- Shoenterprise Corp. v. Willingham, 258 N.C. 36 (each installment accrues separately in installment contracts)
- Neal v. Wachovia Bank & Tr., 224 N.C. 103 (apportionment/divisibility governs installment characterization)
- Wooten v. Walters, 110 N.C. 251 (entire contract vs. severable agreements)
- Jewell v. Price, 264 N.C. 459 (breach triggers statute of limitations immediately)
- Order of R.R. Telegraphers v. Ry. Express Agency, Inc., 321 U.S. 342 (policies underlying statutes of limitations; prevent revival of stale claims)