Plaintiffs Ted L. Bissette and Mary Holly Bissette appeal from an order dismissing the complaint that they filed against Defendants Scott W. Rich and Laura K. Rich
I. Factual Background
A. Substantive Facts
Moss Creek is a single-family residential development located in Guilford County. In 1987, the Moss Creek Homeowners Association filed a Declaration of Covenants, Conditions, and Restrictions which provided, in pertinent part, that no lot in the development “may be subdivided by sale or otherwise [so] as to reduce the total area of the Lot” except by written consent of the Association. Moss Creek Homeowners Ass’n, Inc., v. Bissette,
On 23 December 1993, the Bissettes acquired title to Lot 6 in Moss Creek Development, and subsequently built a house on the lot.
On 5 July 2002, the Bissettes acquired title to the parcel of property adjoining their lot known as Lot 8, and on 10 November 2003, the Bissettes recorded an Instrument of Combination combining the two lots formally. The Bissettes thereafter recorded a plat on 5 December 2003 which (1) split former Lot 8 into two pieces and labeled the new parcels Lot 1 and Lot 2, and (2) recombined Lot 6 and Lot 2 to create a new L-shaped Lot 6 which expanded the backyard of the Bissettes.... [T]he Bissettes sold Lot 1 to Scott and Lama Rich (the “Riches”) on 28 April 2005—
Moss Creek I, 202 N.C. App at 225,
On 18 May 2005, the Association and various individual Association members (the Moss Creek I plaintiffs) filed a complaint against Plaintiffs and Defendants in which they alleged that the transactions described above violated the restrictive covenant provision barring the subdivision of individual lots in Moss Creek. Moss Creek I, 202 N.C. App at 225-26,
... If for any reason . . . the actions reflected in the Instrument of Combination and the Exclusion Map are required to be reversed, then the Richs agree to record the Deed of Easement attached hereto as Exhibit A. The Richs agree to sign the Deed of Easement at the same time as this Agreement. The signed Deed of Easement will be held by [the Riches’] attorney, Jennifer T. Harrod, to be recorded with the Guilford County Register of Deeds if and only if the actions reflected in the Instrument of Combination and the Exclusion Map are required to be reversed, and as a result thereof, the Rich’s acquire title to the aforesaid Tract II. It is expressly agreed and understood by the Parties that the Richs’ actions in signing the Deed ofEasement and giving it to their attorney does not constitute delivery of the Deed of Easement to the Bissettes, and that such Deed of Easement shall not become effective and enforceable unless and until the Deed of Easement is recorded with the Guilford County Register of Deeds.
On 21 December 2005, Defendants entered into a consent judgment with the Moss Creek I plaintiffs under which the Moss Creek I plaintiffs dismissed their claim against Defendants and in which the deed between Plaintiffs and Defendants was declared to be valid and to convey title to the property transferred from Plaintiffs to Defendants in fee simple absolute.
On 7 June 2006, the Moss Creek I plaintiffs “filed [an] amended complaint . . . [seeking] declaratory and injunctive relief against [Plaintiffs] . . . for violating the restrictive covenants.” Moss Creek I at 226,
Plaintiffs noted an appeal to this Court from various orders that had been entered during the course of the Moss Creek I litigation. On 2 February 2010, this Court filed an opinion in Moss Creek I affirming the orders invalidating the Instrument of Combination and Exclusion Map and vesting title in the entirety of Lot 8 in Defendants while overturning certain orders requiring Defendants to pay attorneys’ fees to the Moss Creek I plaintiffs.
B. Procedural History
On 29 December 2011, more than three years and ten months after Judge Webb ordered that the deed from Plaintiffs to Defendants be reformed in such a manner as to vest title to the original Lot 8 in Defendants, Plaintiffs filed a complaint seeking relief based upon Defendants’ refusal to grant Plaintiffs an easement as specified in the 6 September 2005 agreement. In their complaint, Plaintiffs asserted claims sounding in breach of fiduciary duty, constructive fraud, and breach of contract and sought the entry of an order requiring specific performance of the 6 September 2005 agreement. On 4 April 2012, Plaintiffs voluntarily dismissed their complaint against Defendants pursuant to N.C. Gen. Stat. § 1A-1, Rule 41. On 10 April 2012, Plaintiffs filed another complaint against Defendants in which they asserted claims sounding in breach of express trust, constructive fraud, and breach of fiduciary duty and sought the imposition of a resulting or constructive trust on the portion of Defendants’ property that would have been subject to an easement in favor of Plaintiffs pursuant to the 6 September 2005 agreement. On 18 April 2012, Defendants filed a motion seeking dismissal of Plaintiffs’ complaint pursuant to N.C. Gen. Stat. § 1A-1, Rule 12(b)(6) on the grounds that Plaintiffs’ claims were barred by the three year statute of limitations applicable to actions arising from contract claims and asserting, in pertinent part, that:
1. This action is barred by North Carolina’s three-year statute of limitations, N.C. Gen. Stat. §§ 1-15 and 1-52. . . . [F]inal Orders entered by Judge Webb ... on February 12 and March 4, 2008 ... reversed the actions of [Plaintiffs] reflected in the “Instrument of Combination” and the “Exclusion Map” . . . and conveyed title to [Defendants] of the property referred to in the so-called Deed of Easement....
2. ... [Plaintiffs] could have entered suit on February 12, 2008. On that date the disputed property was transferred to [Defendants]. The transfer was not stayed or held in abeyance. The rights of [Plaintiffs], if any, under the subject agreement, became actionable on February 12, 2008. This action was not deemed commenced until December 29, 2011[.]...
3. The subject contract cannot be enforced due to the running of the statute of limitations, because more than three years’ time has elapsed since accrual of [Plaintiffs’ right, if any, to sue for enforcement of the subject contract....
A hearing was held with respect to Defendants’ dismissal motion on 7 May 2012. During the course of this hearing, Plaintiffs expressly abandoned their constructive fraud and breach of fiduciary duty claims and indicated that they were only pursuing their claims for breach of express trust or the imposition of a constructive or resulting trust. On 11 May 2012, the trial court entered an order dismissing Plaintiffs’ complaint for failure to state a claim upon which relief can be granted.
II. Legal Analysis
A. Standard of Review
“The standard of review of an order granting a [motion to dismiss pursuant to N.C. Gen. Stat. § 1A-1, Rule 12(b)(6)] is whether the complaint states a claim for which relief can be granted under some legal theory when the complaint is liberally construed and all the allegations included therein are taken as true. On a motion to dismiss, the complaint’s material factual allegations are taken as true. Dismissal is proper ‘when one of the following three conditions is satisfied: (1) the complaint on its face reveals that no law supports the plaintiff’s claim; (2) the complaint on its face reveals the absence of facts sufficient to make a good claim; or (3) the complaint discloses some fact that necessarily defeats the plaintiff’s claim.’ ” Burgin v. Owen,
“A statute of limitations defense may properly be asserted in a Rule 12(b)(6) motion to dismiss if it appears on the face of the complaint that such a statute bars the claim. Once a defendant raises a statute of limitations defense, the burden of showing that the action was instituted within the prescribed period is on the plaintiff. A plaintiff sustains this burden by showing that the relevant statute of limitations has not expired.’’ Horton v. Carolina Medicorp, Inc.,
B. Scone of Issues to be Resolved on Appeal
The dispositive issues presented by this appeal are whether Plaintiffs’ express trust claim was barred by the statute of limitations and whether Plaintiff sufficiently stated a claim for the imposition of a constructive or resulting trust. In order to make the first of these two determinations, we are required to decide whether Plaintiffs’ complaint stated a valid claim for breach of an express trust or whether, on the other hand, Plaintiffs’ complaint merely alleged a breach of contract claim. Although Plaintiffs suggest that the extent to which the 6 September 2005 agreement created a trust was not properly before the trial court and is not properly before us, we cannot agree with this contention.
At the hearing held with respect to their dismissal motion, Defendants argued that “the factual theory upon which the complaint is based, its only factual theory is breach of a contract,” and that the “three-year statute of limitations bars any contract claims.” In addition, Defendants argued that Plaintiffs had failed to state a valid claim for breach of an express trust, that Defendants had not acted as the settlors with respect to any trust, and that “the law is very clear that you can’t have a trust unless ... the settlor has parted with something to someone as trustee.” Finally, Defendants argued that the property in question was not subject to the imposition of a constructive trust or a resulting trust and that, “as far as the claims in issue, express trust, resulting trust, and constructive trust. . . whatever we call it, it’s a suit on a contract and a three-year statute [of limitations.]” In response, Plaintiffs argued that Defendants’ assertion that they had failed to state a claim for breach of express trust should be ignored, stating that:
[PLAINTIFFS’ COUNSEL]: . . . [T]he Riches filed a Rule 12(b)(6) motion to dismiss. And that was solely on this ground and this ground only. They say the action is barred by the three-year statute of limitations set forth in N.C. [Gen. Stat. §] 1-15 and 1-52. That’s the sole ground of their motion-under [N.C. Gen. Stat. §§ 1A,] Rule 12(b)(6). So we object to any argument that we have not properly stated claims for resulting trust, constructive trust or on -
THE COURT: In my discretion, I’m going to let him argue that on his 12(b)(6) motion. And he’s already argued it.
[PLAINTIFFS’ COUNSEL]: I would like to object.
THE COURT: [You] didn’t object while he was arguing . . . And in my discretion, I’m going to let him argue, and have let him.
Similarly, Plaintiffs suggest in their brief that our review of the trial court’s order should be limited to a determination of the date upon which Plaintiffs’ claim for breach of express trust accrued, an argument which, if accepted, would require us to overlook the more fundamental issue of whether any sort of trust existed in the first place. In support of this contention, Plaintiffs assert, consistently with the position that they took before the trial court, that Defendants’ dismissal motion “was based solely upon their contention that all of the Plaintiffs’ claims were barred by the applicable statute of limitations,” that “[n]o other ground for dismissal was asserted,” that “[t]he parties agree that the three-year statute of limitations applies to Plaintiffs’ cause of action to enforce an express trust,” but that “the parties differ on when the cause of action for breach of the express trust accrued.” We do not find this argument persuasive.
After carefully reviewing the record and the briefs, we conclude that the fundamental dispute between the parties with respect to the validity of Plaintiffs’ express trust claim centers on whether the 6 September 2005 agreement served to create a trust, rather than the date upon which any cause of action which Plaintiffs were entitled to assert under the alleged trust accrued. In essence, the reason that Defendants argued that Plaintiffs’ breach of express trust claim was time-barred was that Plaintiffs had not really asserted a breach of express trust claim at all. In view of the fact that the trial court expressly allowed this issue to be debated in
C. Breach of Express Trust
“ ‘An express trust has been defined as a fiduciary relationship with respect to property, subjecting the person by whom the property is held to equitable duties to deal with the property for the benefit of another person, which arises as a result of a manifestation of an intention to create it. . . . To constitute this relationship there must be a transfer of the title by the donor or settlor for the benefit of another. The gift must be executed rather than executory upon a contingency.’ ” Bland v. Branch Banking & Tr. Co.,
By definition, the creation of a trust must involve a conveyance of property. For a settlor to have the power to create a trust, he must own a transferable property interest or have a power of disposition over such property interest[.] . . . Property which the settlor cannot transfer cannot be held in trust.... [A] “person lacking capacity to make an ordinary transfer of property has no capacity to create an inter vivos trust.”
Jewish Community Ass’n v. Community Bank,
The 6 September 2005 agreement provided that, in the event that Defendants were to obtain ownership of “Tract II” at some point in the future, they would, at that time, grant Plaintiffs an easement applicable to that tract of property. At the time that the parties executed the 6 September 2005 agreement, Defendants had no interest in the prop.erty that was to be the subject of the easement. In light of that fact, Defendants had no power to transfer any right of any nature in Tract 11 at the time the 6 September 2005 agreement was signed. As a result of the fact that Defendants had no authority to transfer, and did not transfer, the res of the alleged trust at the time that the express trust in question was allegedly created, we conclude that the 6 September 2005 agreement did not result in the creation of an express trust, limiting any claims that Plaintiffs were entitled to assert in reliance on that agreement to a garden-variety breach of contract claim.
As Plaintiffs appear to concede, the statute of limitations applicable to breach of contract claims of the nature actually alleged in Plaintiffs’ complaint had expired by the time that their complaint was filed. “In general, an action for breach of contract must be brought within three years from the time of the accrual of the cause of action. [N.C. Gen. Stat. §] 1-52(1)[.] A cause of action generally accrues and the statute of limitations begins to run as soon as the right to institute and maintain a suit arises.” Penley v. Penley,
In seeking to persuade us that their express trust claim against Defendants was not subject to dismissal, Plaintiffs argue that they adequately stated a claim for breach of an express trust. However, Plaintiffs have neither demonstrated that they are entitled to assert that an express trust can be created in the absence of a transfer of property nor even mentioned this deficiency in attempting to persuade us of the merits of their express trust claim. Instead, Plaintiffs simply “contend [that] the cause of action for breach of the express trust did not accrue until 23 November 2011, when all the Defendants repudiated and disavowed the trust agreement, and otherwise refused to record the Deed of Easement.” In fight of the fact that the 6 September 2005 agreement constituted a simple contract rather than an express trust, any claim that Plaintiffs might have been able to assert against Defendants under that agreement accrued on the date upon which Judge Webb determined that Defendants owned all of Lot 8 rather than on the date upon which Defendants expressly “repudiated” their obligations under the 6 September 2005 agreement. As a result, the trial court did not err by dismissing Plaintiffs’ complaint for failure to state a claim for relief pursuant to N.C. Gen. Stat. § 1A-1, Rule 12(b)(6).
D. Constructive or Resulting Trust
Secondly, Plaintiffs argue that the trial court erroneously dismissed their request for the imposition of a constructive or resulting trust entitling them to an easement applicable to Tract II. Once again, we fail to find Plaintiffs’ argument persuasive.
The circumstances in which the imposition of a constructive or resulting trust is appropriate are well-established.
“A constructive trust is a duty, or relationship, imposed by courts of equity to prevent the unjust enrichment of the holder of title to, or of an interest in, property which such holder acquired through fraud, breach of duty or some other circumstance making it inequitable for him to retain it against the' claim of the beneficiary of the constructive trust.... [A] constructive trust is a fiction of equity, brought into operation to prevent unjust enrichment through the breach of some duty or other wrongdoing.... [T]here is a common, indispensable element in the many types of situations out of which a constructive trust is deemed to arise. This common element is some fraud, breach of duty or other wrongdoing by the holder of the property[.]
Cury v. Mitchell,
“[a] resulting trust arises ‘when a person becomes invested with the title to real property under circumstances which in equity obligate him to hold the title and to exercise his ownership for the benefit of another.... A trust of this sort does not arise from or depend upon any sort of agreement between the parties. It results from the fact that one man’s money has been invested in land and the conveyance taken in the name of another.’ ”
The classic example of a resulting trust is the purchase-money resulting trust. In such a situation, when one person furnishes the consideration to pay for the land, title to which is taken in the name of another, a resulting trust commensurate with his interest arises in favor of the one furnishing the consideration. The general rule is that the trust is created, if at all, in the same transaction in which the legal title passes, and by virtue of the consideration advanced before or at the same time the legal title passes.
Although Plaintiffs assert that Defendants “acquired title to the balance of the original Moss Creek lot under circumstances which in equity obligate [Defendants] to hold title and exercise ownership for the benefit of [Plaintiffs], consistent with the Deed of Easement” and that “[e]quity should raise a resulting trust by reason of such circumstances,” Plaintiffs have failed to allege facts that might support such a conclusion. Instead, the factual allegations set out in Plaintiffs’ complaint establish that: (1) Plaintiff purchased an additional lot in the Moss Creek development and subsequently divided it, adding part of the new lot to their original home site and selling the remainder to Defendants; (2) Plaintiffs’ actions violated the restrictive covenants applicable to Moss Creek, which explicitly preclude the subdivision of any lots in that development; and (3), as a remedy for Plaintiffs’ violation of the Moss Creek restrictive covenants, the documents effectuating and evidencing these transactions were declared null and void and the deed in which Plaintiffs had granted Defendants a portion of the original lot was reformed so that Plaintiffs owned Lot 6 and Defendants owned Lot 8 as originally delineated. As a result, the factual allegations set out in Plaintiffs’ complaint do not suffice to establish that Defendants obtained possession of Tract II as the result of any fraud, wrongdoing,
In attempting to persuade us to reach a different conclusion, Plaintiffs cite Wilson v. Development Co.,
III. Conclusion
Thus, for the reasons discussed above, we conclude that the trial court did not err by granting Defendants’ dismissal motion. As a result, the trial court’s order should be, and hereby is, affirmed.
AFFIRMED.
Notes
. Plaintiffs originally asserted claims against Jennifer T. Harrod and Brooks, Pierce, McLendon, Humphrey & Leonard, LLP, as well. On 10 May 2012, Plaintiffs voluntarily dismissed their claims against Ms. Harrod and Brooks, Pierce with prejudice. As a result, all references to “Defendants” in this opinion should be understood as referring to Scott W. Rich and Laura K. Rich.
. Although the Riches were named as defendants in the amended complaint, the complaint expressly incorporates the consent agreement and acknowledges that the Moss Creek I plaintiffs’ claims against the Riches had been resolved.
. In its order, the trial court stated that “jurisdiction of this matter is retained for purposes of (a) taxing costs, (b) entertaining motions for costs (including claims for attorneys’ fees), and (c) motions for sanctions under Rule 11 of the North Carolina Rules of Civil Procedure.” However, given that a claim for attorney’s fees pursuant to N.C. Gen. Stat. § 6-21.5 is not part of a plaintiff’s “underlying substantive claim,” Bumpers v. Cmty. Bank of N. Va.,
. In their brief, Plaintiffs speculate that the “Moss Creek Homeowners Association would have never agreed to allow [Defendants] to obtain title to all of old Lot 8 in the Moss Creek Litigation had the Moss Creek Homeowners Association been informed of the Deed of Easement,” that “[t]he existence of the Agreement and the Deed of Easement between [Plaintiffs] and [Defendants] was withheld in the Moss Creek Litigation settlement discussions,” and that, “[b]y withholding such information, [Defendants] were able to acquire property for which they paid no consideration.” However, Plaintiffs cite no allegations in their complaint which support these conclusoiy assertions. In addition, the trial court, rather than the homeowners’ association, ordered the reformation of the deed to Lot 8. As a result, the additional arguments advanced by Plaintiffs predicated on the theory that, had the parties’ agreement been disclosed during the course of the Moss Creek I litigation, the outcome in that proceeding would have been different do not suffice to justify a reversal of the trial court’s order.