Fresenius Medical Care Holdings, Inc. v. Town of Lillington et al
Filing
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ORDER granting 28 , 80 Motion for Summary Judgment. The Clerk is DIRECTED to close this case. Signed by Senior Judge W. Earl Britt on 7/6/2020. (Herrmann, L.)
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF NORTH CAROLINA
WESTERN DIVISION
No. 5:17-CV-215-BR
FRESENIUS MEDICAL CARE
HOLDINGS, INC. doing business as
FRESENIUS MEDICAL CARE NORTH
AMERICA,
Plaintiff,
v.
TOWN OF LILLINGTON, et al.,
Defendants.
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ORDER
This matter is before the court on defendant No. 1 Chinese Restaurant’s (“No. 1 Chinese”
or “defendant”) motion to dismiss, (DE ## 28, 68), which the court converted to one for
summary judgment on the statute of limitations issue only, (DE # 75). Plaintiff Fresenius
Medical Care Holdings, Inc. (“Fresenius” or “plaintiff”) filed a response in opposition to
summary judgment on the statute of limitations issue. (DE # 79.) Thereafter, defendant formally
moved for summary judgment and filed a reply. (DE ## 80, 81.) This issue is ripe for
disposition.
I.
BACKGROUND
Fresenius alleges “a sewage line which serviced the facilities of both [p]laintiff and
[d]efendant became clogged,” due to “[d]efendant’s continued and repeated dumping of kitchen
waste, cooking oils, and grease into the sewage system.” (Pl.’s Resp., DE # 79, at 2.) In an
attempt to remedy the clogged line, Fresenius contends the Town of Lillington applied high
pressure water to the clog which “caused raw sewage and kitchen grease to back up and overflow
into [its] [f]acility.” (Compl., DE # 1, at 3.) This flooding occurred and was observed on 21
April 2014. (Pl.’s Am. Resp. to Req. for Admis., DE # 81-1, at 3–4.) Fresenius then hired
Restoration & Reconstruction, Inc. (“Servpro”) to immediately remediate the flooding. (Id. at 4;
Compl., DE # 1, at 3.) Servpro performed remediation services at Fresenius’ facility on 21 April
2014. (Pl.’s Am. Resp. to Req. for Admis., DE # 81-1, at 5.) Within months of this incident,1
“[p]laintiff’s employees and occupants began to notice ‘fungal growth’ around the facility’s floor
tiles.” (Pl.’s Resp., DE # 79, at 3 (quoting Hillmann Report, DE # 77-2, at 1; McDonald Decl.,
DE # 79-1, at 6).)2 In October 2014, Fresenius hired Arcadis G&M of North Carolina, LLC
(“Arcadis”) to assess the damage to the facility. (Id.; see also Compl., DE # 1, at 3.) Arcadis
concluded the damage to Fresenius’ facility resulted from the April 2014 flood. (See Pl.’s Resp.,
DE # 79, at 4.)
Fresenius filed this action alleging negligence of No. 1 Chinese on 4 May 2017.
(Compl., DE # 1, at 11.) On 31 August 2017, No. 1 Restaurant at Lillington, Inc. (“No. 1
Restaurant at Lillington”) moved to dismiss the complaint contending the named defendant, No.
1 Chinese, was not an entity capable of being sued. (No. 1 Restaurant at Lillington’s Mot. to
Dismiss, DE # 28, at 1.) On 24 September 2018, the court denied this motion to dismiss and
entered default against No. 1 Chinese, which had not yet made an appearance in the case. (DE #
52, at 3.) On 10 May 2019, the court set aside the entry of default and on 4 September 2019,
allowed No. 1 Chinese to adopt No. 1 Restaurant at Lillington’s previously filed motion to
dismiss. (DE ## 65, 73.) The court then converted the motion to dismiss to one for summary
judgment on the statute of limitations issue. (DE # 75.)
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The point at which Fresenius contends it discovered the fungal growth is uncertain, ranging from one to six months
after the flood. (See Pl.’s Resp., DE # 79, at 3.)
2
Fresenius filed the Hillmann Report with its provisional response brief at docket entry 77. After the court granted
Fresenius’ motion for extension of time, Fresenius filed a finalized response brief but did not refile this exhibit. (See
DE # 79.) Because the exhibit was filed with the provisional response and is cited in the final response brief, the
court will consider it.
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II.
STANDARD OF REVIEW
Summary judgment is appropriate when the record reveals “that there is no genuine
dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.
R. Civ. P. 56(a); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). In determining
whether a genuine issue of material fact exists, the court must view the evidence and the
inferences drawn therefrom in the light most favorable to the nonmoving party. Scott v. Harris,
550 U.S. 372, 378 (2007). “Ordinarily, the question of whether a cause of action is barred by the
statute of limitations is a mixed question of law and fact. However, when the bar is properly
pleaded and the facts are admitted or are not in conflict, the question of whether the action is
barred becomes one of law and summary judgment is appropriate.” Pembee Mfg. Corp. v. Cape
Fear Constr. Co., 329 S.E.2d 350, 353 (N.C. 1985) (internal citations omitted); See Rothmans
Tobacco Co. v. Liggett Grp., Inc., 770 F.2d 1246 (4th Cir. 1985) (affirming grant of summary
judgment barring suit based on the statute of limitations).
III.
DISCUSSION
Fresenius makes both procedural and substantive arguments in opposition to No. 1
Chinese’s statute of limitations defense. The court will address these arguments in turn.
A. Procedural Considerations
Fresenius contends “it would be reversible error for this [c]ourt to sua sponte rule on [the
statute of limitations] issue.” (Pl.’s Resp., DE # 79, at 9.) Here, No. 1 Chinese specifically pled
the statute of limitations as a defense: “Plaintiff’s claims against No. 1 Chinese Restaurant, and
any and all restaurant defendants are barred by the applicable statutes of limitation.” (No. 1
Chinese’s Answer, DE # 67, at 2.) No. 1 Chinese also adopted No. 1 Restaurant at Lillington’s
previously filed motion to dismiss and supporting memorandum, which specifically incorporates
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the affidavit of Mei Fend Xiao. (Adopted Mot. to Dismiss, DE # 28, at 2.) That affidavit also
specifically raises a statute of limitations defense:
The incident alleged in the complaint wherein the sewer line backed up into the
[p]laintiff’s building occurred in April of 2014. The pleadings in this case were not
filed until May 4, 2017. The cause of action alleged against the restaurant is based
on negligence, and the three year [s]tatute of [l]imitations had run at the time of the
filing of the complaint.”
(Xiao Aff., DE # 28-1, at 2.) Additionally, No. 1 Chinese briefed its statute of limitations
defense in its motion to set aside entry of default. (Mot. to Set Aside, DE # 57, at 11–12.)
Therefore, No. 1 Chinese raised the statute of limitations defense. See Bonestell v. North
Topsail Shores Condominiums, Inc., 405 S.E.2d 222, 224 (N.C. Ct. App. 1991) (holding that
pleading the statute of limitations as an affirmative defense “was sufficient to put the court and
parties on notice that the timing of the lawsuit was an issue”); cf. Eriline Co. S.A. v. Johnson,
440 F.3d 648, 653–54 (4th Cir. 2006) (noting the statute of limitations defense may be waived
when defendant fails to raise it in its answer).
Because No. 1 Chinese’s motion to dismiss specifically incorporated materials outside of
the pleadings, which the court intended to consider, it converted the motion to dismiss to one for
summary judgment on the statute of limitations issue. (DE # 75.) The court allowed Fresenius
21 days to file any pertinent materials and allowed No. 1 Chinese time to file any responsive
materials. (Id.) Thus, not only was the defense raised by No. 1 Chinese, but both parties have
had an opportunity to brief the issue. This issue is properly before the court.
B. Substantive Considerations
1. Applicable statute of limitations
The parties disagree as to the applicable statute of limitations period. Fresenius contends
the six-year statute of limitations for damages arising out of improvements to real property
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applies because “water and sewer lines are considered ‘improvements to real property’ in North
Carolina” under N.C. Gen. Stat. § 1-50(a)(5)(b)(3-5) (Pl.’s Resp., DE # 79, at 16 .) No. 1
Chinese contends the three-year statute of limitations applicable to negligence actions under N.C.
Gen. Stat. § 1-52(16) governs this action. (Def.’s Mem. Supp., DE # 81, at 3.)
“The purpose of section 1-50(a)(5) is to protect from liability those persons who make
improvements to real property.” Bryant v. Don Galloway Homes, Inc., 556 S.E.2d 597, 600
(N.C. Ct. App. 2001). Thus, “N.C. Gen. Stat. § 1-50[(a)](5) applies to defective improvements
to real property by a materialman, meaning one who furnishes or supplies materials used in
building construction, renovation or repair.” Monson v. Paramount Homes, Inc., 515 S.E.2d
445, 447 (N.C. Ct. App. 1999) (citing Forsyth Memorial Hospital v. Armstrong World Indus.,
444 S.E.2d 423 (N.C. 1994)). Here, Fresenius alleges No. 1 Chinese negligently disposed of
grease and kitchen waste which caused a sewer line to become clogged and ultimately resulted in
the flooding of its facility. (Compl., DE # 1, at 12.) No. 1 Chinese, a restaurant, is not at all
involved in the construction, renovation, or repair of improvements to real property. Even
accepting as true Fresenius’ argument that sewer lines constitute “improvements to real
property,” where as here, the harm does not relate to or arise from the construction or repair of
the line and was not caused by anyone responsible for those tasks, N.C. Gen. Stat. § 1-50(a)(5) is
inapplicable. Compare East Carolina Masonry, Inc. v. Weaver Cooke Constr., LLC, No. 5:15CV-252, 2016 U.S. Dist. LEXIS 29029, at *13 (E.D.N.C. Jan. 20, 2016) (applying N.C. Gen.
Stat. § 1-50(a)(5) in action by project developer against contractors who built the a condominium
complex), and Whitehurst v. Hurst Built, 577 S.E.2d 168, 169 (N.C. Ct. App. 2003) (applying
N.C. Gen. Stat. § 1-50(a)(5) to claims against a contractor, arising out of the installation of a
synthetic stucco system), and Nolan v. Paramount Homes, Inc., 518 S.E.2d 789, 790 (N.C. Ct.
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App. 1999) (applying N.C. Gen. Stat. § 1-50(a)(5) where the lawsuit arose out of a construction
company’s construction and sale of a home to plaintiff), with Harrison v. City of Sanford, 627
S.E.2d 672, 674 (N.C. Ct. App. 2006) (applying N.C. Gen. Stat. § 1-52(16) in suit by a
homeowner against the city for failing to remedy a sewage overflow on the homeowner’s
property). Thus, this negligence action is governed by the three-year statute of limitations set
forth in N.C. Gen. Stat. § 1-52(16).
2. Discovery Rule
Assuming the three-year statute of limitations applies, Fresenius nonetheless contends
this action was timely filed. (Pl.’s Resp., DE # 79, at 11.) Under the common law rule, a cause
of action accrues at the time the injury occurs, “even when the injured party is unaware that the
injury exists.” Pembee, 329 S.E.2d at 353 (citation omitted). N.C. Gen. Stat. § 1-52(16)
modifies this rule to protect plaintiffs in the case of latent injuries, “by providing that a cause of
action does not accrue until the injured party becomes aware or should reasonably have become
aware of the existence of the injury.” Id. at 354 (citing Raftery v. Wm. C. Vick Constr. Co., 230
S.E.2d 405 (N.C. 1976)). “It does not change the fact that once some physical damage has been
discovered the injury springs into existence and completes the cause of action.” Marshburn v.
Associated Indem. Corp., 353 S.E.2d 123, 128 (N.C. Ct. App. 1987) (quoting Pembee Mfg.
Corp. v. Cape Fear Constr. Co, 317 S.E.2d 41, 43 (N.C. Ct. App. 1984)). “It does not matter that
further damage could occur; such further damage is only aggravation of the original injury.”
Pembee, 329 S.E.2d at 354 (citation omitted). Thus, N.C. Gen. Stat. § 1-52(16) delays accrual
“‘in the case of latent damages until the plaintiff is aware he has suffered damage, not until he is
aware of the full extent of the damages suffered.’” McCarver v. Blythe, 555 S.E.2d 680, 683
(N.C. Ct. App. 2001) (quoting Pembee, 317 S.E.2d at 43).
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According to Fresenius, it did not discover the property damage “until ‘[s]everal months
following the incident,’ when [p]laintiff’s employees and occupants began to notice ‘fungal
growth’ around the facility’s floor tiles.” (Pl.’s Resp., DE # 79, at 3 (quoting Hillmann Report,
DE # 77-2, at 1; McDonald Decl., DE # 79-1, at 6).) The cause of the discoloration and growth
was unknown until at least 13 November 2014, when the Arcadis Report was issued. (Id.) Thus,
it contends, the statute of limitations period did not begin to run until this date. (Id. at 14.)
Defendant, however, contends the statute of limitations began to run on 21 April 2014. (Def.’s
Mem. Supp., DE # 81, at 7.) Defendant asserts there is no dispute that the flood incident
occurred and was at least partially remedied on that date. (Id.)
The flood incident occurred on 21 April 2014. (Id.; Pl.’s Am. Resp. to Req. for Admis.,
DE # 81-1, at 3–4.) On that day: an individual employed by Fresenius observed standing water
in a drain within Fresenius’ building, (Pl.’s Am. Resp. to Req. for Admis., DE # 81-1, at 3); after
an unsuccessful attempt to unclog a sewer line, “dirty water flowed into the [p]laintiff’s
building,” flooding the clinic, (id. at 4); Fresenius contacted ServPro and requested it clean up
the water located in the clinic, (id.; Servpro Contract, DE # 81-3, at 1); and ServPro performed
remediation/clean up services in the clinic, (Pl.’s Am. Resp. to Req. for Admis., DE # 81-1, at 5;
see also Hillmann Report, DE # 77-2, at 2 (“Servpro removed impacted building materials which
consisted of two of five impacted carpets; the remaining building materials were treated, dried
and left in place.”)). Thus, there is no dispute that Fresenius was aware of the flooding on that
date.3
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Although Fresenius originally alleged the flood occurred in June 2014, it later concluded the flood “probably
occurred in late April 2014.” (Letter from Counsel, DE # 57-7, at 1.) In its amended response to the requests for
admissions, Fresenius admits, upon information and belief, that the flood occurred on 21 April 2014. (Pl.’s Am.
Resp. to Req. for Admis., DE # 81-1, at 6.) Fresenius also admits, upon information and belief, that there was not a
separate water incident in June 2014. (Id.)
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Fresenius seemingly suggests a distinction should be made between the flood incident
and the mold/fungal growth. (See Pl.’s Resp., DE # 79, at 13–14.) The plaintiff in Pembee made
a similar argument. There, the plaintiff filed suit regarding the construction of a defective roof
more than three years after it first discovered leaks in the roof. Pembee, 329 S.E.2d at 354.
Attempting to survive the statute of limitations, the plaintiff argued “that a distinction should be
made between the leaks in the roof and the blistering caused by entrapment of moisture, and that
this distinction create[d] a material issue of fact.” Id. at 354. The court rejected this argument,
noting:
Plaintiff’s claim is based on the assertion that its roof is defective. Plaintiff clearly
knew more than three years prior to bringing suit that it had a defective roof, yet
took no legal action until the statute of limitations had run. The fact that further
damage which plaintiff did not expect was discovered does not bring about a new
cause of action, it merely aggravates the original injury.
Id. (citation omitted).
Comparably, in Marshburn, the plaintiffs filed suit based on damage sustained from a
lightning strike. 353 S.E.2d at 128. In affirming the trial court’s grant of summary judgment,
the court recognized:
The immediate and obvious damage to the structure, for which [the plaintiffs]
received payment from defendant [insurance company], made it apparent to
plaintiffs that their home had been damaged, and their cause of action against
defendants accrued at that time. The fact that evidence of latent damages was
discovered more than three years later does not restart the statutory limitations
period.
Id.; see also McCarver, 555 S.E.2d at 683 (holding where the defendant knew of some damage to
the deteriorating property, discovery of additional damages seven years later does not circumvent
the statute of limitations).
In this case, Fresenius’ action is based on the assertion that No.1 Chinese negligently
clogged a sewer line, the unclogging of which caused Fresenius’ property to flood. (Compl., DE
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# 1, at 11–12.) The record reveals Fresenius knew there was a sewage flood which damaged its
property in April 2014. Although plaintiff may not have known the full extent of the damage
until months later, the fact that the property was damaged by the flood was apparent on 21 April
2014. Much like the blistering of the roof was not a separate injury sufficient to restart the
statute of limitations, nor is the noticing of mold here. See Pembee, 329 S.E.2d at 355. In this
case, there was one injury—a flood—the damages from which were exacerbated by the mold.
Plaintiff’s argument to the contrary, relying on Baum v. John R. Poore Builder, Inc., 643
S.E.2d 607 (N.C. Ct. App. 2007), and Williams v. Houses of Distinction, Inc., 714 S.E.2d 438
(N.C. Ct. App. 2011), is unavailing. In Baum, the plaintiffs noticed cracks in their deck tiles in
June 2000. 643 S.E.2d at 609. As a result, they contacted their builder to have the tiles replaced
or repaired. Id. Their builder directed them to contact the tile company, who replaced the tiles
and assured the plaintiffs there were no structural problems in the deck causing the cracked tiles.
Id. Under those circumstances, the court held that noticing cracked tiles was insufficient to put
the plaintiffs on notice of structural defects in the deck. Id. at 611. Similarly, in Williams, the
court held that noticing a “handful” of leaks around different windows and doors, intermittently
over the course of years, when the plaintiffs were referred to the distributor for repairs and
assured the leaks were corrected, was insufficient to place them on notice of structural defects in
their home. 714 S.E.2d at 445. The facts of these cases differ significantly from Fresenius’.
Here, Fresenius did not notice sporadic product defects, but rather knew its property flooded with
“raw sewage and kitchen grease” on 21 April 2014. (Compl., DE # 1, at 3.) It knew the
“flooding damage” required immediate remediation. (Id.) It was aware of property damage
allegedly caused by No. 1 Chinese’s negligence on 21 April 2014, yet did not file this action
until 4 May 2017
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IV.
CONCLUSION
The record establishes that Fresenius’ property flooded on 21 April 2014 and it was
aware of some damage caused by this event on that day. It filed this action more than three years
later, outside the applicable statute of limitations. Accordingly, summary judgment is
GRANTED. The Clerk is DIRECTED to close this case.
This 6 July 2020.
__________________________________
W. Earl Britt
Senior U.S. District Judge
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