Court Opinion

ID: 9580520
Source: CourtListenerOpinion
Date Created: 2023-08-21 22:05:47.874699+00
Date Added: 2024-06-11T13:36:19.927801
License: Public Domain

Judge HUDSON,
concurring in part and dissenting in part.
As to the first issue presented — whether the statute of repose began to run with the closing by plaintiffs or with the purchase of the *35EIFS by American Drywall — I concur with the majority. I also concur on the disposition regarding defendant Montaco. However, for reasons that will be explained here, I do not agree that we are bound by Monson v. Paramount Homes, Inc., 133 N.C. App. 235, 515 S.E.2d 445 (1999), on the question of the tolling of the statute of repose by the filing of the class action in Ruff v. Parex. I also believe that the plaintiffs’ forecast of evidence is sufficient to raise a genuine issue of material fact as to willful and wanton negligence on the part of American Drywall. Therefore, I respectfully dissent with regard to these two issues.
The pertinent procedural history on the statute of repose issue is as follows. The Ruff suit was filed on 5 January 1996, well inside the statute of repose period (under the majority holding here, the statute of repose did not run until April of 1997, six years after American Drywall purchased the EIFS). Plaintiffs filed their complaint in this case on or about 19 August 1998, while they were still part of the putative class in the pending Ruff case. On 17 June 1999, Judge Tennille entered an order allowing plaintiffs to opt out of the class action in order to pursue their cause of action individually in state court.
Defendants argue that plaintiffs’ individual state law claim against Dryvit is barred by the six-year statute of repose found in N.C. Gen. Stat. § l-50(a)(6) (1999). Plaintiffs argue that the statute of repose was tolled by the filing of the class action against Dryvit in the Ruff case. The majority, citing In the Matter of Appeal from Civil Penalty, 324 N.C. 373, 384, 379 S.E.2d 30, 37 (1989), holds that we are bound to follow Monson v. Paramount Homes, which states that, although statutes of limitations may be tolled by equity, statutes of repose in North Carolina may not be tolled by doctrines of equity. See Monson, 133 N.C. App. at 240, 515 S.E.2d at 449.
I disagree with the majority for two reasons. First, I do not believe that we are bound to follow Monson. Second, and as a result, I believe that the statute of repose was tolled when the plaintiffs in Ruff (including these plaintiffs) filed the class action in that suit.
As to the first point, I do not believe we are bound by Monson, primarily because the language quoted by the majority is not the holding in the case, but is merely dictum. The actual holding in Monson is that the statute of repose found in N.C. Gen. Stat. § l-50(a)(5) (1999) (statute of repose applicable to improvements to real property) does not begin to run anew each time a repair is made to the property at issue. See Monson, 133 N.C. App. at 241-42, 515 S.E.2d at 450 (explain*36ing that N.C.G.S. § l-50(a)(5) itself specifies that the statute of repose begins to run from “substantial completion,” and that a “ ‘repair’ does not qualify as a ‘last act’ ”). Indeed, the Court stated that “[t]he dis-positive issue in the present case is whether a repair qualifies as the ‘last act or omission’ under N.C. Gen. Stat. § l-50[a](5).” Id. at 238, 515 S.E.2d at 448. Thus, the statement that “equitable doctrines ... do not toll substantive rights created by statutes of repose,” id. at 240, 515 S.E.2d at 449, is mere dictum, which we are not bound to follow. See Trustees of Rowan Tech. v. Hammond Assoc., 313 N.C. 230, 242, 328 S.E.2d 274, 281 (1985) (“Language in an opinion not necessary to the decision is obiter dictum and later decisions are not bound thereby.”). Further, the factual context here is so dissimilar to Monson as to be distinguishable, even if the above statement were the holding of the case.
Moreover, previous panels of this Court have specifically held that equitable doctrines are applicable to statutes of repose. See Bryant v. Adams, 116 N.C. App. 448, 460, 448 S.E.2d 832, 838 (1994) (“Equitable estoppel may . . . defeat a defendant’s statute of repose defense.”), disc. review denied, 339 N.C. 736, 454 S.E.2d 647 (1995); One North McDowell Assn. v. McDowell Development Co., 98 N.C. App. 125, 127-28, 389 S.E.2d 834, 836 (stating that “[i]t is well established that the doctrine of equitable estoppel will deny the right to assert a defense based on lapse of time” and concluding that “Defendants are therefore estopped from raising [the statute of repose] in bar of plaintiffs’ action”), disc, review denied, 327 N.C. 432, 395 S.E.2d 686 (1990). In these two cases, this Court specifically applied equitable doctrines to prevent the application of statutes of repose pursuant to N.C.G.S. § 1-50. See Douglas v. Sandoz Pharm. Corp., No. 1:98CV00911, 2000 WL 33342286, at *6 (M.D.N.C. July 18, 2000) (“North Carolina courts are split on the question of whether equitable estoppel can toll the statute of repose.”).
The Court in Monson makes no reference to either Bryant or McDowell. Therefore, I do not believe that we are bound to follow the dicta in Monson regarding considerations of equity, when previous decisions of this Court have specifically held otherwise. I believe that, to the extent considerations of equity control the running of the statute of repose here, we are bound by the holdings in Bryant and McDowell rather than the quoted dictum in Monson, and that the statute of repose was tolled as to defendant Dryvit by the filing of the class action in Ruff.
*37This result is consistent with the U.S. Supreme Court decision in American Pipe & Construction Co. v. Utah, 414 U.S. 538, 38 L. Ed. 2d 713 (1974). In American Pipe, the U.S. Supreme Court held that “the commencement of a class action suspends the applicable statute of limitations as to all asserted members of the class.” 414 U.S. at 554, 38 L. Ed. 2d at 727. Although I recognize that the case before us does not involve a statute of limitations, the equitable principles involved are the same. Here, had plaintiffs remained parties to the class action, their claims against Dryvit clearly would not have been barred by the statute of repose because the class action was filed against defendant Dryvit inside of the six-year limitations period. In light of the fact that the class suit was actually pending and the plaintiffs still part of the putative class when their suit was filed in state court, I can see no reason to treat these plaintiffs more harshly than those in American Pipe.
These facts are similar to those in Burnett v. New York Central Railroad Co., 380 U.S. 424, 13 L. Ed. 2d 941 (1965), relied upon by the U.S. Supreme Court in American Pipe. In Burnett, the plaintiff timely filed his Federal Employer’s Liability Act (“FELA”) suit in Ohio state court, but the case was dismissed for improper venue under state procedural rules. See 380 U.S. at 424-25, 13 L. Ed. 2d at 943. In federal courts and in some states, such cases may be transferred to a court where venue is proper; in Ohio, however, the rules required plaintiff to file a new suit within a specified time period. See id. at 430-32, 13 L. Ed. 2d at 946-48. Eight days after the dismissal of his suit by the state court, but outside the FELA statute of limitations period, the plaintiff filed an identical suit in federal court. See id. at 425, 13 L. Ed. 2d at 943.
The Court held that the original filing had tolled the statute of limitations during the pendency of the state suit, and thus, the federal suit was timely filed. See id. at 435, 13 L. Ed. 2d at 949. In its discussion, the Court noted that in other circumstances the FELA limitations period had been extended, see id. at 427, 13 L. Ed. 2d at 944-45, and that “Congress would not wish a plaintiff deprived of his rights when no policy underlying [the] statute of limitations is served in doing so,” id. at 434, 13 L. Ed. 2d at 949. The Court identified the policies underlying statutes of limitations as follows:
Statutes of limitations are primarily designed to assure fairness to defendants. Such statutes promote justice by preventing surprises through the revival of claims that have been allowed to slumber until evidence has been lost, memories have faded, and *38witnesses have disappeared. The theory is that even if one has a just claim it is unjust not to put the adversary on notice to defend within the period of limitation ....
Id. at 428, 13 L. Ed. 2d at 945 (internal quotation marks omitted). These policy reasons are virtually indistinguishable from those articulated as the basis for the statutes of repose in our State. As our Supreme Court has observed, the statute of repose was intended to shield defendants from “ ‘open-ended’ liability,” and its advantages are certainty and the “elimination of] tenuous claims involving older products for which evidence . . . may be difficult to produce.” Tetterton v. Long Manufacturing Co., 314 N.C. 44, 54, 332 S.E.2d 67, 73 (1985) (internal quotation marks omitted).
The purposes of the statute of repose are not offended by allowing the plaintiffs here to proceed, since they have already sued Dryvit, and the class suit is ongoing. Dryvit has been defending the suit and will doubtless continue to do so, whether or not these plaintiffs proceed individually. In fact, the only parties adversely affected by the operation of the statute of repose are these plaintiffs, who did not “sit on their rights,” or file a “stale” claim, but would nonetheless have their claims defeated. Accordingly, since I believe that we may apply considerations of equity, I would follow American Pipe and Burnett and hold that in these circumstances the plaintiffs are not barred.
As to the defendant American Drywall, I believe that the evidence was sufficient on the issue of willful or wanton negligence to raise a genuine issue of material fact on the question of the application of the statute of repose to them. See N.C. Gen. Stat. § 1-50(a)(5)(e) (1999); Forsyth Memorial Hospital v. Armstrong World Industries, 336 N.C. 438, 446, 444 S.E.2d 423, 428 (1994). Steven W. Matthews was project manager on the plaintiffs house for American Drywall, who subcontracted the application of the EIFS to David Davis. In his deposition, Matthews acknowledged that he knew that the EIFS was a “barrier system” that is dependent upon sealing to keep out moisture, that the system had to be installed properly to prevent water intrusion, and that it was important to follow the specifications of Dryvit for the system to operate properly. He further acknowledged that he did not check to see if the applicator’s work complied with the Dryvit specifications, that based on verbal instructions, he allowed work on sealants and caulk joints to be done in a manner which could have been a “fairly significant deviation” from the Dryvit specifications, *39and that he was not familiar with the requirements of the building code. I believe that all of these statements and other evidence forecast in the record raise a genuine issue of material fact regarding whether Matthews acted with “a deliberate purpose not to discharge a legal duty . . . to . . . the person or property of another.” Siders v. Gibbs, 39 N.C. App. 183, 187, 249 S.E.2d 858, 860 (1978). Accordingly, I would remand for trial as to American Drywall.
In sum, I concur in part in that I would affirm the granting of summary judgment against Montaco, and I agree with the majority analysis as to when the statute of repose began to run against Dryvit. Believing that the filing of the class suit in Ruff v. Parex tolled the running of that statute, however, I would remand for trial against Dryvit. Because I believe that there are genuine issues of material fact pertaining to defendant American Drywall, I would remand for trial against that defendant as well. Thus, I respectfully concur in part and dissent in part.