SMITH v. BANK OF THE CAROLINAS CORPORATION

Filing 64

MEMORANDUM OPINION, ORDER, AND RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE signed by MAG/JUDGE L. PATRICK AULD on 10/11/12, Ordering that the Motion of Defendant Bank of the Carolinas for Leave to File Amended Counterclaim and Third Party Compl aint (Docket Entry 57 ) is GRANTED and that Bank of the Carolinas shall file an Amended Counterclaim and Third Party Complaint substantially in the form of the attachment to said Motion by October 19, 2012. Within 60 days of service of that Amended Counterclaim and Third-Party Complaint, the Parties shall file a status report setting out their joint and/or respective positions regarding any modifications to the Scheduling Order. FURTHER that Plaintiff's Motion to Amend Reply to Countercl aims (Docket Entry 38 ) is DENIED AS MOOT. Recommending that Bank of the Carolinas' Motions [sic] to Dismiss (Docket Entry 11) be granted in part in that the Court should dismiss Plaintiff's claim for breach of contract and should strike references in the Amended Complaint to "retaliation" and "harassment" but otherwise should allow Plaintiff to pursue her "Title VII Claim for Sex Discrimination," as well as her claims for "Wrongful Discharge and T reatment in Violation of North Carolina Public Policy Against Discrimination" and "Violation of Equal Pay Act 29 USC 206(d)(1)." FURTHER that Bank of the Carolinas' Motion to Dismiss Plaintiff's Title VII Claim (Docket Entry 15 ) and Motion to Dismiss Plaintiff's Wrongful Discharge Claim (Docket Entry 41 ) be denied. FURTHER that Bank of the Carolinas' Motion for Judgment on the Pleadings (Docket Entry 28 ) be denied as moot and/or unripe. (Law, Trina)

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF NORTH CAROLINA

ROBIN SMITH,

)
)
)
)
)
)
)
)
)
)
)

Plaintiff and
Counterclaim Defendant,
v.
BANK OF THE CAROLINAS,
Defendant and
Counterclaim Plaintiff.

1:11CV1139

MEMORANDUM OPINION, ORDER, AND RECOMMENDATION
OF UNITED STATES MAGISTRATE JUDGE
The instant matter comes before the undersigned United States
Magistrate Judge for disposition of Plaintiff’s Motion to Amend
Reply

to

Defendant

Counterclaims

(Docket

Bank

Carolinas

of

the

Entry
for

38)

and

Leave

to

the

Motion

File

of

Amended

Counterclaim and Third Party Complaint (Docket Entry 57), as well
as for a recommended ruling on Bank of the Carolinas’ (1) Motions
[sic]

to

Dismiss

(Docket

Entry

11);

(2)

Motion

to

Dismiss

Plaintiff’s Title VII Claim (Docket Entry 15); (3) Motion for
Judgment on the Pleadings (Docket Entry 28); and (4) Motion to
Dismiss Plaintiff’s Wrongful Discharge Claim (Docket Entry 41).
(See Docket Entries dated Mar. 19, 2012, Apr. 11, 2012, May 10,
2012, July 30, 2012; see also Docket Entries dated Dec. 30, 2011
(assigning case to undersigned Magistrate Judge and referring case
to Amended Standing Order 30).)

For the reasons that follow, the undersigned will grant the
Motion of Defendant Bank of the Carolinas for Leave to File Amended
Counterclaim and Third Party Complaint (Docket Entry 57) (and
accordingly

will

deny

Plaintiff’s

Motion

to

Amend

Reply

to

Counterclaims (Docket Entry 38) as moot) and will recommend the
denial of Bank of the Carolinas’ Motion for Judgment on the
Pleadings (Docket Entry 28) as moot and/or unripe, the granting in
part of Bank of the Carolinas’ Motions [sic] to Dismiss (Docket
Entry 11), and the denial of Bank of the Carolinas’ remaining
Motions to Dismiss (Docket Entries 15, 41).
BACKGROUND
The

instant

action

arises

out

of

an

employer-employee

relationship between Plaintiff and Bank of the Carolinas.
Docket Entry 8.)

(See

The Amended Complaint alleges that Bank of the

Carolinas employed Plaintiff subject to an employment agreement
(the

“Employment

Agreement”)

renewing three-year terms.

which

provided

(See id. ¶¶ 10-11.)

for

continually

According to the

Amended Complaint, the Employment Agreement further declared that,
if Bank of the Carolinas terminated Plaintiff without cause, Bank
of the Carolinas “was to [pay] [Plaintiff] a salary continuation at
the current base salary for the remaining unexpired term of the
[Employment Agreement] . . . .”

(Id. ¶ 13.)

Purportedly, Bank of

the Carolinas terminated Plaintiff without cause and failed to

-2-

continue paying Plaintiff her salary as required by the Employment
Agreement.

(Id. ¶¶ 16, 18.)

Plaintiff’s Amended Complaint also alleges that, as of 2009,
Plaintiff was the only female Executive Vice President of Bank of
the Carolinas (id. ¶ 9), that Bank of the Carolinas did not
terminate any of the male Executive Vice Presidents (id. ¶ 16),
that Bank of the Carolinas paid other male employees of the same
grade as Plaintiff and within two grades lower than Plaintiff a
higher salary (with the exception of one “newly hired” male) (id.
¶ 19), and that Plaintiff did not receive the same benefits as
similarly situated male employees (id. ¶¶ 23-25).
As a result of the foregoing, Plaintiff filed a Complaint,
naming Bank of the Carolinas Corporation as Defendant, in the
General Court of Justice, Superior Court Division, Davie County,
North Carolina.

(Docket Entry 3.)

Plaintiff’s Complaint alleged

claims for (1) “Breach of Contract” (id. at 5-6); (2) “Title VII
Claim
(3)

For

Sex

“Wrongful

Discrimination
Discharge

and

and

(id.

at

6-7);

Violation

of

North

Retaliation”

Treatment

in

Carolina Public Policy” (id. at 7-8); and (4) “Violation of Equal
Pay Act 29 USC 206(d)(1)” (id. at 8).

Bank of the Carolinas

Corporation petitioned this Court for removal on the basis of
federal question jurisdiction.

(See Docket Entry 1.)

Thereafter, Plaintiff filed an Amended Complaint (also in the
General Court of Justice, Superior Court Division, Davie County,

-3-

North Carolina) maintaining the same four causes of action, but
substituting “Bank of the Carolinas” for “Bank of the Carolinas
Corporation” as Defendant.

(See Docket Entry 8.)

Bank of the

Carolinas, a separate legal entity from Bank of the Carolinas
Corporation and the proper party to this action, filed an Amended
Notice of Removal (see Docket Entry 6), and, on that same day, a
Motion for Substitution of Party, “pray[ing] that it be substituted
for [Bank of the Carolinas] Corporation in this action nunc pro
tunc” (Docket Entry 7 at 2).

Said Motion identifies Bank of the

Carolinas as a wholly-owned subsidiary of Bank of the Carolinas
Corporation and notes that Bank of the Carolinas Corporation is a
bank holding company with no employees.
Bank

of

the

Carolinas

then

(See id. at 1.)1

Answered

Plaintiff’s

Amended

Complaint (Docket Entry 10) and separately filed a Counterclaim
against Plaintiff for: (1) “Complaint on Promissory Notes” (Docket
Entry 13, ¶¶ 21-25); (2) “Fraud, Misrepresentation and Breach of
Fiduciary Duty” (id. ¶¶ 26-33); and (3) “Unfair and Deceptive Trade
Practices” (id. ¶¶ 34-38).

Bank of the Carolinas’ counterclaims

rest on allegations that Plaintiff, while an employee of Bank of
the Carolinas, fraudulently obtained two loans from Bank of the
Carolinas on which she has failed to make payments, resulting in

1

The Court previously granted that Motion.

14.)
-4-

(Docket Entry

indebtedness to Bank of the Carolinas in excess of $100,000.00.
(See id. ¶¶ 1-20.)
Bank of the Carolinas has now filed three separate Motions to
Dismiss, entitled (1) Motions [sic] to Dismiss (Docket Entry 11);
(2) Bank of the Carolinas’ Motion to Dismiss Plaintiff’s Title VII
Claim (Docket Entry 15); and (3) Defendant Bank of the Carolinas’
Motion to Dismiss Plaintiff’s Wrongful Discharge Claim (Docket
Entry 41), as well as a Motion for Judgment on the Pleadings on its
first counterclaim (Docket Entry 28).

In addition, Plaintiff has

filed a Motion to Amend Reply to Counterclaims (Docket Entry 38)
and Bank of the Carolinas filed a Motion for Leave to File Amended
Counterclaim and Third Party Complaint (Docket Entry 57).

Because

Bank

Amended

of

the

Counterclaim

Carolinas’
and

Third

Motion
Party

for

Leave

Complaint

to

File

potentially

moots

Plaintiff’s Motion to Amend Reply to Counterclaims and Bank of the
Carolinas’

own

previously-filed

Motion

for

Judgment

on

the

Pleadings, the undersigned addresses that Motion first.
BANK OF THE CAROLINAS’ MOTION TO AMEND
Bank of the Carolinas “moves this Court for leave to file an
Amended Counterclaim and Third Party Complaint against Plaintiff,
Billy R. Smith, Sam Crowell, and the Estate of Robert E. Marziano.”
(Docket Entry 57 at 1.)

Bank of the Carolinas claims that, since

it filed its original Counterclaim, “it has learned through the
course of its investigation and discovery in this action that

-5-

Plaintiff did not act alone in the fraudulent issuance of the selfserving loans for herself and her husband, Billy R. Smith . . .
that serve as the basis for the Counterclaim, but rather with the
knowledge, consent, and participation of former Bank employee and
compliance officer Sam Crowell [] and former Bank President and
Chief Executive Officer Robert E. Marziano [].”
Given

the

procedural

posture

of

the

(Id. ¶ 6.)

case,

Bank

of

the

Carolinas may “amend its pleading only with [Plaintiff’s] written
consent or the [C]ourt’s leave.”

Fed. R. Civ. P. 15(a)(2).

The

applicable Rule further directs that “[t]he [C]ourt should freely
give leave when justice so requires.”

Id.

Under this standard,

the Court has some discretion, “but outright refusal to grant the
leave without any justifying reason appearing for the denial is not
an exercise of discretion . . . .”
182 (1962).

Foman v. Davis, 371 U.S. 178,

Reasons to deny leave to amend a pleading include

“undue delay, bad faith or dilatory motive on the part of the
movant,

repeated

failure

to

cure

deficiencies

by

amendments

previously allowed, undue prejudice to the opposing party by virtue
of allowance of the amendment, [and] futility of amendment,” id.
Plaintiff claims that Bank of the Carolinas’ instant Motion
unduly

delays

this

action

(see

Docket

Entry

62

at

3-5)

and

constitutes bad faith litigation because “[Bank of the Carolinas]
has not only created needless delay . . . by moving to amend its
pleadings

after

filing

a

motion

-6-

for

judgment

on

those

same

pleadings, but [Bank of the Carolinas] has also wasted this Court’s
resources, as well as [P]laintiff’s resources, in filing these
[M]otions” (id. at 5).
filed

the

instant

However, given that Bank of the Carolinas

Motion

in

compliance

with

the

deadlines

established as a result of the Consent Motion for Modification of
Scheduling Order Deadline to Add Parties or Amend Pleadings (see
Docket Entry 53, ¶ 6; see also Docket Entry dated May 24, 2012
(granting said consent Motion)), to which Plaintiff agreed only
slightly more than a month prior to the filing of the instant
Motion (see Docket Entry 53), Plaintiff’s contentions of undue
delay

and/or

bad

faith

ring

hollow.

Having

agreed

to

a

modification of the Scheduling Order that allowed Bank of the
Carolinas to make such a request to amend at the time it did,
Plaintiff cannot now reasonably argue that the timing of the
proposed amendments establishes undue delay or demonstrates bad
faith.

Moreover, Plaintiff has cited no authority in support of

such a position.

(See Docket Entry 62 at 3-5.)

In addition, Plaintiff contends that she will be “unduly
prejudiced by [Bank of the Carolinas’] proposed amendment” (id. at
5-6)

because

“[Bank

of

the

Carolinas’]

motion

to

amend

its

pleadings serves as a tactic to gain additional discovery, now that
it has exceeded the limitations set by this Court for reasonable
discovery in this action.”

(Id. at 6.)

Plaintiff, however, does

not explain how an amendment that primarily involves the addition

-7-

of parties will increase the amount of discovery Bank of the
Carolinas can obtain from Plaintiff.

Moreover, to the extent

Plaintiff receives any discovery demands she considers abusive, she
has recourse.

See Fed. R. Civ. P. 26(c).

Finally, Plaintiff claims that Bank of the Carolinas’ proposed
amendment qualifies as futile because the applicable statute(s) of
limitations render at least some of the new claims untimely.
Docket Entry 62 at 6-7.)

(See

Bank of the Carolinas replies: “The

claims at issue are governed by N.C. Gen. Stat. § 1-52, which
toll[s] the statute of limitations until discovery of the unlawful
acts.”

(Docket Entry 63 at 7.)

An amendment fails for futility if

the proposed claim(s) could not survive a motion to dismiss under
Federal Rule of Civil Procedure 12(b)(6).

United States ex rel.

Wilson v. Kellogg Brown & Root, Inc., 525 F.3d 370, 376 (4th Cir.
2008).

A Rule 12(b)(6) motion generally “cannot reach the merits

of an affirmative defense, such as the defense that the plaintiff’s
claim

is

time-barred

[except]

.

.

.

in

the

relatively

rare

circumstances where facts sufficient to rule on an affirmative
defense are alleged in the complaint.”
494 F.3d 458, 464 (4th Cir. 2007).

Goodman v. Praxair, Inc.,

The instant scenario does not

represent one of the “rare circumstances where facts sufficient to
rule on an affirmative defense are alleged in the complaint,” id.,

-8-

and thus the Court cannot say that Bank of the Carolinas’ proposed
amendment is futile due to untimeliness.2
Under

these

facts,

the

Court

(per

the

undersigned,

see

generally Everett v. Prison Health Servs., 412 F. App’x 604, 605 &
n.2 (4th Cir. 2011); Deberry v. Davis, No. 1:08CV582, 2010 WL
1610430, at *7 n.8 (M.D.N.C. Apr. 19, 2010) (unpublished)), will
grant the instant Motion.3

2

Moreover, Plaintiff’s brief states: “Should Bank of the
Carolinas’ motion be granted, [P]laintiff will argue that the
statute of limitations has expired as to several of the new claims
Bank of the Carolinas seeks to add to its counterclaim.” (Docket
Entry 62 at 7 (emphasis added).) Besides failing to specify which
claims allegedly suffer from timeliness defects, Plaintiff’s
statement appears to concede that at least some proposed claims
would survive a statute of limitations challenge.
3

Granting Bank of the Carolinas’ Motion for Leave to File
Amended Counterclaim and Third Party Complaint renders Plaintiff’s
Motion to Amend her Answer to Bank of the Carolinas’ original
Counterclaim moot. See Re/Max, LLC v. Underwood, Civil No. WDQ-102367, 2012 WL 369578, at *3 n.17 (D. Md. Feb. 1, 2012)
(unpublished) (“If the original complaint has no legal effect, see
Young [v. City of Mt. Ranier], 238 F.3d [567,] 572 [(4th Cir.
2001)], neither does the amended answer filed in response to that
complaint.”); Syngenta Crop Prot., Inc. v. U.S.E.P.A., 222 F.R.D.
271, 273 n.2 (M.D.N.C. 2004) (Tilley, C.J.) (“[The defendant’s]
Motion for Leave to Amend its Answer is moot because [the
plaintiff’s] filing of an amended complaint automatically gives
[the defendant] the right to file a new answer.”); see also Fed. R.
Civ. P. 15(a)(3) (“Unless the court orders otherwise, any required
response to an amended pleading must be made within the time
remaining to respond to the original pleading or within 14 days
after service of the amended pleading, whichever is later.”).
Moreover, granting Bank of the Carolinas’ instant Motion also
renders Bank of the Carolinas’ own previously-filed Motion for
Judgment on the Pleadings (Docket Entry 28) moot and/or unripe.
See Manley v. Doe, ___ F. Supp. 2d ___, ___, 2012 WL 359994, at *1
(E.D.N.C. Feb. 2, 2012) (“This court granted plaintiffs’ motion to
amend and denied defendants’ motion for judgment on the pleadings
as moot.”); Henderson v. Wells Fargo Bank, Civil No. 3:09cv01, 2009
WL 1259355, at *4 n.4 (W.D.N.C. May 5, 2009) (unpublished)
(continued...)
-9-

MOTIONS TO DISMISS
Because the pending Motions to Dismiss filed by Bank of the
Carolinas

address

Plaintiff’s

Amended

Complaint,

which

the

foregoing Motion to Amend would not affect, those Motions remain
ripe for consideration.

Although they do not explicitly so state,

the undersigned construes the three Motions to Dismiss filed by
Bank of the Carolinas as brought under Federal Rule of Civil
Procedure 12(b)(6) which provides for dismissal due to failure to
state a claim upon which relief can be granted.

A complaint fails

to state a claim if it does not “contain sufficient factual matter,
accepted as true, to ‘state a claim to relief that is plausible on
its face.’”

Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting

Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)) (emphasis
added).

“Where

a

complaint

pleads

facts

that

are

‘merely

consistent with’ a defendant’s liability, it ‘stops short of the
line

between

relief.”’”

possibility

and

plausibility

of

“entitlement

Id. (quoting Twombly, 550 U.S. at 557).

to

This standard

“demands more than an unadorned, the-defendant-unlawfully-harmed-me
accusation.”

Id.

In other words, “the tenet that a court must

accept as true all of the allegations contained in a complaint is

3

(...continued)
(“Plaintiff is advised that if his Motion to Amend were allowed,
the Motion for Judgment on the pleadings would have been moot, and
defendant would then be required to file either an answer or other
response to the Amended Complaint, which could include a new Motion
for Judgment on the Pleadings based on the allegations in that
amended pleading.”).
-10-

inapplicable to legal conclusions.

Threadbare recitals of the

elements of a cause of action, supported by mere conclusory
statements, do not suffice.”

Id.4

To the extent the Court must draw conclusions about matters of
North Carolina law in evaluating the instant Motions, “the highest
court of the state is the final arbiter of what is state law.

When

it has spoken, its pronouncement is to be accepted by federal
courts as defining state law unless it has later given clear and
persuasive indication that its pronouncement will be modified,
limited or restricted.” West v. American Tel. & Tel. Co., 311 U.S.
223, 236 (1940).

However, “[a] state is not without law save as

its highest court has declared it.

There are many rules of

decision commonly accepted and acted upon by the bar and inferior
courts which are nevertheless laws of the state although the
highest court of the state has never passed upon them.”

Id.

Accordingly, “it is the duty of [a federal court facing a
question of state law] to ascertain from all the available data
what the state law is and apply it . . . .”

Id. at 237.

“Where an

intermediate appellate state court rests its considered judgment
upon the rule of law which it announces, that is a datum for
ascertaining state law which is not to be disregarded by a federal

4

“[D]etermining whether a complaint states on its face a
plausible claim for relief and therefore can survive a Rule
12(b)(6) motion . . . requires the reviewing court to draw on its
judicial experience and common sense.” Francis v. Giacomelli, 588
F.3d 186, 193 (4th Cir. 2009).
-11-

court unless it is convinced by other persuasive data that the
highest court of the state would decide otherwise.”
I.

Id.

Motions [sic] to Dismiss (Docket Entry 11)
Bank of the Carolinas’ first Motion to Dismiss asks the Court:

(1) to dismiss Plaintiff’s claim for breach of contract as barred
by res judicata; and (2) to dismiss or to strike all claims in the
Amended

Complaint

harassment.
A.
Bank

alleging

or

referencing

retaliation

and/or

(Docket Entry 11 at 1.)

Plaintiff’s Claim for Breach of Contract
of

the

Carolinas

contends

that

“Plaintiff,

having

heretofore sued [Bank of the Carolinas] for Breach of Contract in
Davie County, 10-CVM-374, and [] [having] reduced those claims to
judgment, which judgment has been satisfied in full, is barred and
estopped herein by virtue of res judicata, waiver and estoppel”
from pursuing her claim of breach of contract in this Court. (Id.)
Under North Carolina law,5 “[r]es judicata precludes a second suit
involving the same claim between the same parties or those in
privity with them when there has been a final judgment on the
merits in a prior action in a court of competent jurisdiction.”

5

“[T]hough the federal courts may look to the common law or
to the policies supporting res judicata and collateral estoppel in
assessing the preclusive effect of decisions of other federal
courts, Congress has specifically required all federal courts to
give preclusive effect to state-court judgments whenever the courts
of the State from which the judgments emerged would do so . . . .”
Allen v. McCurry, 449 U.S. 90, 96 (1980); see also Andochick v.
Byrd, Civil Action No. 1:11-cv-739, 2012 WL 1656311, at *4 (E.D.
Va. May 9, 2012) (unpublished) (citing same).
-12-

Moody v. Able Outdoor, Inc., 169 N.C. App. 80, 84, 609 S.E.2d 259,
261 (2005) (citation omitted). Moreover, “[a] judgment operates as
an estoppel not only as to all matters actually determined or
litigated in the proceeding, but also as to all relevant and
material matters within the scope of the proceeding which the
parties, in the exercise of reasonable diligence, could and should
have brought forward for determination.”

Id.

Accordingly, under North Carolina law, res judicata properly
applies where a litigant can prove: “(1) a final judgment on the
merits in an earlier suit, (2) an identity of the causes of action
in both the earlier and the later suit, and (3) an identity of the
parties or their privies in the two suits.”

Id.

Res judicata bars

Plaintiff’s claim for breach of contract under this standard.
First,

a

final

judgment

on

the

merits

was

reached

in

Plaintiff’s previous breach of contract suit against Bank of the
Carolinas, in that a state court entered a judgment in favor of
Plaintiff as to her claim for breach of the “Noncompetition;
Confidentiality” provision of the Employment Agreement.

(See

Docket Entry 11-3 at 2.)
Second, an identity of the causes of action exists as to the
two cases. Although Plaintiff now alleges breach of contract under
a different provision of the Employment Agreement than she did
previously, both her past and present breach of contract claims
involve monies owed under the Employment Agreement and Plaintiff

-13-

“could and should have brought [them] forward for determination [in
a single proceeding],” Moody, 169 N.C. App. at 84.

See, e.g.,

Phoenix Canada Oil Co., Ltd. v. Texaco Inc., 749 F. Supp. 525, 535
(S.D.N.Y. 1990) (“Where an action includes a cause of action for
breach of a particular contract, a second action seeking additional
recovery from breach of that same contract is generally considered
part of the same factual ‘transaction’ and is precluded, where the
grounds for additional recovery might have been included in the
first action.”)6
Third, no dispute exists as to identity of the parties.

Both

Plaintiff and Defendant remain the same in both cases.
In sum, the Court should grant Bank of the Carolinas’ request
for dismissal of Plaintiff’s breach of contract claim because
allowing Plaintiff to proceed with a second breach of contract
claim arising from the Employment Agreement when she could have
brought that claim along with her earlier breach of contract claim
arising from the Employment Agreement would disserve the goals of
efficiency and judicial economy which res judicata aims to promote.
See, e.g., Sensormatic Sec. Corp. v. Sensormatic Elecs. Corp., 329
F. Supp. 2d 574, 580 (D. Md. 2004) (“Regardless of the specific

6

Plaintiff does not argue that her instant claim for breach
of contract remained unaccrued at the time she filed the prior
action. (See Docket Entry 31 at 3-8.) Nor has Plaintiff cited any
authority to support her contention that the contractual provision
she litigated previously qualifies as a “divisible” portion of the
Employment Agreement. (See id.)
-14-

provision that [the plaintiff] alleges was breached, the factual
predicate of [the breach of contract claims in the two lawsuits] is
the Franchise Agreement between [the plaintiff and the defendant].
Both lawsuits involve breaches of the same contract, committed by
the same party and question the extent of the parties’ agreed upon
obligations. . . .

Granting [the plaintiff] leave to pursue its

[breach of contract] claims in the new action would frustrate the
policies underlying the res judicata doctrine, put the parties to
the cost and vexation of multiple lawsuits, deplete judicial
resources, foster inconsistent decision, and diminish reliance on
judicial decisions.” (internal quotation marks omitted)).7
7

Plaintiff’s decision to bring her prior breach of contract
claim in small claims court does not compel a different result. In
Holloway v. Holloway, ___ N.C. App. ___, ___, 726 S.E.2d 198, 202
(2012), the North Carolina Court of Appeals held that res judicata
did not bar a litigant from bringing a claim in a separate action
where that claim met the definition in N.C. Gen. Stat. § 1A-1, Rule
13(a) of a compulsory counterclaim in a prior action. The court
rested its finding in part on the fact that the counterclaim could
not have been brought in the prior action because the prior action
arose in small claims court, such that the counterclaim, exceeding
$5,000, fell outside that court’s jurisdiction; more specifically,
the
court
noted
that
N.C.
Gen.
Stat.
§
7A-219
bars
“counterclaim[s], cross claim[s], or third-party claim[s] which
would make the amount in controversy exceed the jurisdictional
amount.” Holloway, ___ N.C. App. at ___, 726 S.E.2d at 202. Here,
unlike on the facts in Holloway where the defendant with the
compulsory counterclaim was subject to the plaintiff’s forum
choice, Plaintiff chose the forum when bringing the initial claim,
thereby limiting her own means of recovery.
On similar facts,
another court noted: “The plaintiff chose her venue, she should not
only be able to take advantage of the benefits of that choice, but
should also be bound by the consequences.” Hindmarsh v. Mock, 57
P.3d 803, 806 (Idaho 2002). Similarly, the United States District
Court for the Eastern District of New York observed that a
litigant’s “failure to bring her cause of action in the appropriate
court in the first place does not trump principles of res
(continued...)
-15-

B.

Plaintiff’s References to Retaliation and Harassment

Bank of the Carolinas also contends that Plaintiff has no
cognizable claim for either retaliation or harassment and urges the
Court to strike or to dismiss those claims.
at 4, 8.)8

(See Docket Entry 12

In this regard, Bank of the Carolinas notes that

Plaintiff’s Amended Complaint alleges a “Title VII Claim for Sex
Discrimination and Retaliation” (Docket Entry 8 at 6 (emphasis
added)) and that, within her claims for “Wrongful Discharge and
Treatment in Violation of North Carolina Public Policy Against
Discrimination” and “Violation of Equal Pay Act 29 USC 206(d)(1),”
Plaintiff includes allegations referencing “retaliation” by Bank of
the Carolinas (Docket Entry 8, ¶¶ 44, 45, 50).
12

at

4-8.)

Bank

of

the

Carolinas

also

(See Docket Entry
takes

issue

with

Plaintiff’s use of the word “harassment” in her wrongful discharge
claim (Docket Entry 8, ¶ 44).

(See Docket Entry 12 at 8.)

The elements of a retaliation claim are: “(1) [the plaintiff]
engaged in a protected activity, (2) the employer acted adversely
against her, and (3) there was a causal connection between the
7

(...continued)
judicata.” Weitz v. Wagner, No. CV-07-1106 (ERK)(ETB), 2008 WL
5605669, at *6 n.5 (E.D.N.Y. July 24, 2008) (unpublished); see also
Davenport v. North Carolina Dep’t of Transp., 3 F.3d 89, 97 n.8
(4th Cir. 1993) (“[A] plaintiff’s invocation of a state forum that
can’t handle all her claims is at risk of preclusion . . . .”).
8

Plaintiff did not address Bank of the Carolinas’ contentions
regarding “retaliation” or “harassment” in her Response.
(See
Docket Entry 31.)
Under the Local Rules of this Court, said
failure generally warrants granting the relief requested. M.D.N.C.
LR7.3(k).
-16-

protected activity and the asserted adverse action.”
Freightliner, LLC, 650 F.3d 321, 337 (4th Cir. 2011).

Hoyle v.
The Amended

Complaint fails to identify any protected action by Plaintiff.
(See Docket Entry 8.)

Rather, the Amended Complaint alleges that

Bank of the Carolinas “retaliated against [P]laintiff because of
her sex” and lists a number of “discriminatory and retaliatory
acts” which amount to nothing more than assertions that Bank of the
Carolinas

treated

counterparts.

her

unequally

(See id. ¶ 39.)

in

comparison

to

her

male

It appears that the Amended

Complaint simply uses the terms “discrimination” and “retaliation”
interchangeably.

Because

“discrimination”

and

“retaliation”

represent distinct claims under Title VII and Plaintiff has not
pled facts sufficient to support a retaliation claim, the Court
should strike all references to “retaliation” in the Amended
Complaint in order to avoid confusion.

See Fed. R. Civ. P. 12(f)

(“The court may strike from any pleading . . . any . . . immaterial
[or] impertinent . . . matter.”).
The Court should likewise strike the Amended Complaint’s
references to “harassment.”

“To demonstrate sexual harassment

. . ., a plaintiff must show that there is (1) unwelcome conduct;
(2) that is based on the plaintiff’s sex . . .; (3) which is
sufficiently

severe

or

pervasive

to

alter

the

plaintiff’s

conditions of employment and to create an abusive work environment;
and (4) which is imputable to the employer.”

-17-

Mosby-Grant v. City

of

Hagerstown,

quotation

marks

630

F.3d

and

326,

citation

334

(4th

omitted).

Cir.

2010)

However,

(internal

Plaintiff’s

references to harassment appear solely as follows:
It is the public policy of the State of North Carolina,
as expressed in N.C.Gen.Stat. § 143-422.2, that employees
be free from sexual harassment, discrimination and
retaliatory treatment in their employment.
It is a
violation of the public policy of North Carolina to
harass, discriminate or retaliate against an employee
based on her gender, and her reports of and opposition to
sexual harassment, or to discharge her on the same
grounds.
(Docket Entry 8, ¶ 44.)

Plaintiff does not otherwise appear to

pursue a claim of hostile work environment/harassment, nor does she
include factual matter consistent with such a claim.
Entry 8.)

(See Docket

Accordingly, the Amended Complaint’s references to

“harassment” should be stricken.

See Fed. R. Civ. P. 12(f).

The Amended Complaint’s wayward terminology does not warrant
any additional action.

In other words, after striking Plaintiff’s

references to harassment and retaliation, the Court should allow
Plaintiff to pursue her “Title VII Claim for Sex Discrimination,”
as well as her claims for “Wrongful Discharge and Treatment in
Violation of North Carolina Public Policy Against Discrimination”
and “Violation of Equal Pay Act 29 USC 206(d)(1).”
II.

Bank of the Carolinas’ Motion to Dismiss Plaintiff’s Title
VII Claim (Docket Entry 15)
Next, Bank of the Carolinas moves to dismiss Plaintiff’s Title

VII claim “on grounds that [her] [C]omplaint was untimely filed
against the wrong defendant.”

(Docket Entry 15 at 1.)
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Bank of the

Carolinas offers two arguments in support of this position. First,
Bank of the Carolinas contends that Plaintiff failed to commence
this action within 90 days of the receipt of Notice of Right to Sue
from the Equal Employment Opportunity Commission as required under
42 U.S.C. § 2000e-5(f)(1).

(See Docket Entry 16 at 4-8.)

Second,

Bank of the Carolinas argues that, even if Plaintiff timely
asserted a Title VII claim, her original Complaint named the wrong
party as Defendant and the substitution of a new party does not
relate back under North Carolina law.

(See id. at 8-10.)

Plaintiff responds that, because she properly moved for an
extension of time to file her Complaint under Rule 3 of the North
Carolina Rules of Civil Procedure, she timely commenced this
action.

(See Docket Entry 32 at 5-7.)

In addition, Plaintiff

argues that any misnomer should not affect the timeliness of her
Title VII claim because the substitution of Bank of the Carolinas
for Bank of the Carolinas Corporation relates back under North
Carolina law and because Bank of the Carolinas received actual
notice (evidenced in part by Bank of the Carolinas’ motion seeking
to substitute itself for Bank of the Carolinas Corporation nunc pro
tunc (Docket Entry 7)).

(See id. at 7-11.)9

9

Plaintiff also contends that both the Motion to Dismiss
Plaintiff’s Title VII Claim and the Motion to Dismiss Plaintiff’s
Wrongful Discharge Claim violate Fed. R. Civ. P. 12(g)(2) because
they raise 12(b)(6) defenses which Bank of the Carolinas could have
brought in its earlier 12(b)(6) motion. (See Docket Entry 32 at
5.) “Simply stated, the objective of [Rule 12(g)] is to eliminate
(continued...)
-19-

A.

Timely Commencement of the Action

A plaintiff pursuing a Title VII action must commence suit
within 90 days of receipt of the Notice of Right to Sue.

42 U.S.C.

§ 2000e-5(f)(1). Plaintiff exercised her right to bring her action
in state court.

Lassiter v. LabCorp Occupational Testing Servs.,

Inc., 337 F. Supp. 2d 746, 751 (M.D.N.C. 2004) (Bullock, J.) (“A
plaintiff may file suit alleging a violation of Title VII in either
state or federal court.” (citing Yellow Freight Sys., Inc. v.
Donnelly, 494 U.S. 820, 823 (1990)).
North

Carolina

Rules

of

Civil

As noted in Lassiter, “[t]he

Procedure

do

not

limit

commencement of a lawsuit to the filing of a complaint.

the
A

Plaintiff may, alternatively, commence an action by filing for an
extension of time and by securing a summons from the state court.”
Id. (citation omitted).

Accordingly, by requesting an extension

under Rule 3 of the North Carolina Rules of Civil Procedure and
having a summons issued within the applicable statutory period (see

9

(...continued)
unnecessary delay at the pleading stage.” Rauch v. Day & Night
Mfg. Corp., 576 F.2d 697, 701 n.3 (6th Cir. 1978). “[D]istrict
courts have ‘overlook[ed] a 12(g) defect’ in order to serve the
purpose underlying the rule.” Adams v. Tennessee, No. 3:04-cv00346, 2011 WL 3236609, at *3 (M.D. Tenn. July 29, 2011)
(unpublished) (quoting Davis v. City of Dearborn, No. 2:09-CV14892, 2010 WL 3476242, at *4 (E.D. Mich. Sept. 2, 2010)
(unpublished)). The undersigned finds no indication that Bank of
the Carolinas filed said Motions with the intent to delay these
proceedings. Moreover, Bank of the Carolinas could have included
the arguments at issue in a motion for judgment on the pleadings.
See Fed. R. Civ. P. 12(h)(2)(B). Accordingly, on the facts of this
case, the Court should exercise its discretion to decide Bank of
the Carolinas’ instant Motions on their merits.
-20-

Docket Entry 4), Plaintiff timely commenced this action.

See

Lassiter, 337 F. Supp. 2d at 751-52.
Bank of the Carolinas urges the Court to depart from the
decision in Lassiter, contending that said decision is “not free
from doubt.”

(Docket Entry 16 at 7.)

To support this argument,

Bank of the Carolinas cites Cannon v. Kroger Co., 832 F.2d 303 (4th
Cir. 1987), and Henderson Fruit & Produce Co. v. United States, 181
F. Supp. 2d 566 (E.D.N.C. 2001), two cases which declined to allow
Rule 3 of the North Carolina Rules of Civil Procedure to extend the
applicable period for commencing an action later removed to federal
court.

However, the reasoning in Henderson rested largely on

considerations of sovereign immunity - an issue not applicable on
See Henderson, 181 F. Supp. 2d at 568.

the instant facts.

Moreover, as Bank of the Carolinas acknowledges (see Docket Entry
16 at 7), this Court has previously noted that Cannon specifically
addresses “hybrid” section 301/fair representation claims under the
National Labor Relations Act.

See Sheaffer v. County of Chatham,

337 F. Supp. 2d 709, 725 (M.D.N.C. 2004) (Osteen, Sr., J.) (“The
reasoning of Cannon, however, makes clear that the rationale for
barring the operation of Rule 3 was motived by a desire for
uniformity in ‘hybrid’ cases that had been expressed by the Supreme
Court.”)

In

fact,

the

Court,

in

the

more

recently

decided

Sheaffer, found, like Lassiter, that by acting in compliance with
Rule

3

of

the

North

Carolina

Rules

-21-

of

Civil

Procedure,

the

plaintiff in that action did not run afoul of a similar time
restriction for bringing suit on an Americans with Disabilities Act
claim.

See id. at 724-25.

Under these circumstances, the Court

should reject the position taken by Bank of the Carolinas on this
issue.
B.

Relation Back of Party Substitution

Bank of the Carolinas next argues that, because Plaintiff
named the wrong Defendant in the Complaint and the addition of a
new party does not relate back under North Carolina law, the action
fails as untimely.

This argument lacks merit.

The undersigned notes initially that “[t]he 90-day filing
requirement is not a jurisdictional prerequisite to suit in federal
court, but a requirement that, like a statute of limitations, is
subject to waiver, estoppel, and equitable tolling.”

Crabill v.

Charlotte Mecklenburg Bd. of Educ., 423 F. App’x 314, 321 (4th Cir.
2011) (internal quotation marks omitted).

Moreover, shortly after

Plaintiff filed her Amended Complaint and Bank of the Carolinas
filed the Amended Petition to remove the instant action to this
Court, Bank of the Carolinas filed a Motion for Substitution of
Party “pray[ing] that it be substituted for [Bank of the Carolinas]
Corporation in this action nunc pro tunc” (Docket Entry 7 at 1-2),
and the Court granted Bank of the Carolinas’ Motion (see Docket
Entry 14).

-22-

On these facts, the Court need not conduct an analysis of
relation back under North Carolina law, because Bank of the
Carolinas’ own prior litigation conduct has rendered the matter
moot.

In other words, having previously granted Bank of the

Carolinas’ own Motion substituting itself nunc pro tunc in this
action, the Court should not now find that Bank of the Carolinas
only became a Party to this action outside of the period allowed
for commencing suit.

Accordingly, the Court also should deny this

aspect of the instant Motion.
III. Defendant Bank of the Carolinas’ Motion to Dismiss Plaintiff’s
Wrongful Discharge Claim (Docket Entry 41)
Through its final Motion to Dismiss, Bank of the Carolinas
“moves the Court . . . to dismiss Plaintiff’s Third Claim for
Relief on grounds that there is no common-law action for wrongful
discharge

in

North

Carolina

where

the

terminated

employee’s

employment and termination are governed by an employment contract
setting forth the conditions of termination and the remedies
therefor.”

(Docket Entry 41 at 1.)

In response, Plaintiff

contends that, because she may plead alternate theories for relief,
the Court should deny Bank of the Carolinas’ instant Motion.
Docket Entry 45 at 7-9).

(See

Plaintiff’s argument has merit.

The Federal Rules of Civil Procedure allow pleading in the
alternative.

See Fed. R. Civ. P. 8(d)(2).

This Court, in fact,

has allowed a plaintiff to allege a claim for wrongful discharge
where the plaintiff also asserted that an employment agreement
-23-

governed the employer-employee relationship at issue. See Myers v.
Roush Fenway Racing, LLC, No. 1:09CV508, 2010 WL 2765378, at *3
(M.D.N.C. July 12, 2010) (Beaty, C.J.) (unpublished) (“At this
early stage in the proceedings, . . . under the liberal pleading
rules of the Federal Rules of Civil Procedure, a plaintiff may
properly plead alternate causes of action in the complaint. . . .
Accordingly, at this juncture in the present case, the Court finds
that [the] [p]laintiff is not precluded from alternatively pleading
a cause of action for wrongful discharge, in the event that [the]
[p]laintiff served [the] [d]efendant as an at-will employee, rather
than pursuant to an employment agreement.” (internal citations
omitted)).10

Accordingly, the Court should deny Bank of the

Carolina’s Motion to Dismiss Plaintiff’s Wrongful Discharge Claim.
CONCLUSION
Under the standard set forth in Rule 15(a) of the Federal
Rules of Civil Procedure, the undersigned will grant the Motion of
Defendant

Bank

of

the

Carolinas

for

Leave

to

File

Amended

Counterclaim and Third Party Complaint (Docket Entry 57).
decision

renders

both

Plaintiff’s

Motion

to

Amend

That

Reply

to

Counterclaims (Docket Entry 38) and Bank of the Carolinas’ Motion
10

In support of its position, Bank of the Carolinas cites
Myers v. Roush Fenway Racing, LLC, No. 1:09CV508, 2009 WL 5215375
(M.D.N.C. Dec. 28, 2009) (Dixon, M.J.) (unpublished), which
recommended dismissal of a plaintiff’s claim for wrongful discharge
because the plaintiff also alleged that an employment agreement
governed. Chief Judge Beaty, however, specifically declined to
adopt that portion of the Recommendation.
See Myers, 2010 WL
2765378, at *3.
-24-

for Judgment on the Pleadings (Docket Entry 28) moot and/or unripe.
Next, the Court should grant in part Bank of the Carolinas’ Motions
[sic] to Dismiss (Docket Entry 11) in that the Court should find
Plaintiff’s claim for breach of contract barred by res judicata and
should strike all references to “retaliation” and “harassment,” but
otherwise should allow Plaintiff to pursue her “Title VII Claim for
Sex Discrimination,” as well as her claims for “Wrongful Discharge
and Treatment in Violation of North Carolina Public Policy Against
Discrimination” and “Violation of Equal Pay Act 29 USC 206(d)(1).”
Finally, Bank of the Carolinas’ remaining Motions to Dismiss lack
merit.
IT IS THEREFORE ORDERED that the Motion of Defendant Bank of
the Carolinas for Leave to File Amended Counterclaim and Third
Party Complaint (Docket Entry 57) is GRANTED and that Bank of the
Carolinas shall file an Amended Counterclaim and Third Party
Complaint substantially in the form of the attachment to said
Motion by October 19, 2012.

Within 60 days of service of that

Amended Counterclaim and Third-Party Complaint, the Parties shall
file a status report setting out their joint and/or respective
positions regarding any modifications to the Scheduling Order.
IT IS FURTHER ORDERED that Plaintiff’s Motion to Amend Reply
to Counterclaims (Docket Entry 38) is DENIED AS MOOT.
IT IS RECOMMENDED that Bank of the Carolinas’ Motions [sic] to
Dismiss (Docket Entry 11) be granted in part in that the Court
-25-

should dismiss Plaintiff’s claim for breach of contract and should
strike references in the Amended Complaint to “retaliation” and
“harassment” but otherwise should allow Plaintiff to pursue her
“Title VII Claim for Sex Discrimination,” as well as her claims for
“Wrongful Discharge and Treatment in Violation of North Carolina
Public Policy Against Discrimination” and “Violation of Equal Pay
Act 29 USC 206(d)(1).”
IT IS FURTHER RECOMMENDED that Bank of the Carolinas’ Motion
to Dismiss Plaintiff’s Title VII Claim (Docket Entry 15) and Motion
to Dismiss Plaintiff’s Wrongful Discharge Claim (Docket Entry 41)
be denied.
IT IS FURTHER RECOMMENDED that Bank of the Carolinas’ Motion
for Judgment on the Pleadings (Docket Entry 28) be denied as moot
and/or unripe.

/s/ L. Patrick Auld
L. Patrick Auld
United States Magistrate Judge
October 11, 2012

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