CODY CREEK PARK, INC. v. CAPITAL ONE SERVICES, LLC et al

Filing 21

MEMORANDUM OPINION AND ORDER signed by JUDGE THOMAS D. SCHROEDER on 07/25/2017, that Defendants' motion to dismiss (Doc. 13 ) is GRANTED and the complaint (Doc. 7 ) is DISMISSED WITH PREJUDICE. A judgment in accordance with this Order will issue separately.(Taylor, Abby)

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF NORTH CAROLINA
CODY CREEK PARK, INC.,
Plaintiff,
v.
CAPITAL ONE SERVICES, LLC;
CAPITAL ONE SERVICES II, LLC;
CAPITAL ONE FINANCIAL
CORPORATION; CAPITAL ONE BANK;
CAPITAL ONE BANK (USA), N.A.;
and CAPITAL ONE, N.A.,
Defendants.

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1:16CV1136

MEMORANDUM OPINION AND ORDER
THOMAS D. SCHROEDER, District Judge.
Plaintiff Cody Creek Park, Inc. (“Cody Creek”) brings this
action to recoup thousands of dollars in credit card payments it
claims were made with funds embezzled by its former employee and
her husband dating back some twelve years ago.

Defendants move to

dismiss the complaint on the ground the claim is barred by the
applicable statute of limitations.

(Doc. 13.)

For the reasons

set forth below, the motion will be granted and the complaint will
be dismissed with prejudice.
I.

BACKGROUND
Viewed in the light most favorable to Plaintiff, the operative

facts are as follows:
Plaintiff

Cody

Creek

operates

recreational

facilities in Surry County, North Carolina.

and

banquet

(Doc. 7 at 1, ¶ 1.)

From

December

29,

2005,

through

March

16,

2012,

Cody

Creek

contracted bookkeeping services from Cheryl White, who used her
position to embezzle funds from the company.

(Id. at 3, ¶ 19.)

During the same time, White and her husband held credit cards
issued by Defendants (id. at 2, ¶¶ 12-15) and used embezzled funds
to pay off those credit cards (id. at 3, ¶ 19).
Whites made exceeded their average income.

The payments the

(Compare id. at 3,

¶ 25 (alleging that White’s husband had an average monthly income
of $2541.76), with id. at 4, ¶ 26 (alleging that his monthly credit
card bills exceeded $4000).) Cody Creek discovered the misfeasance
in July of 2014.

(Id. at 3, ¶ 18.)

On August 6, 2016, Cody Creek filed the present claim in Surry
County, North Carolina, Superior Court, alleging that Defendants
knew or should have known that the Whites’ bills exceeded their
income

and

were

authorization.

being

paid

with

Cody

(Id. at 3, ¶¶ 21, 22.)

Creek’s

funds

without

In an untitled claim, Cody

Creek alleges that Defendants “received and consciously accepted
a

benefit

of

discharging

indebtedness”

when

the

Whites

used

embezzled funds to pay off their credit cards (id. at 4, ¶ 35),
unjustly enriching Defendants (id. at 5, ¶ 37).

Cody Creek seeks

a constructive trust on Defendants and on the Whites’ credit card
payments. (Id. at 5, ¶ 41.) Defendants timely removed this action
on the basis of diversity jurisdiction (Doc. 1) and now move to

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dismiss the complaint pursuant to Federal Rule of Civil Procedure
12(b)(6).
II.

ANALYSIS
The purpose of a Rule 12(b)(6) motion is to “test[] the

sufficiency

of

a

complaint”

and

not

to

“resolve

contests

surrounding the facts, the merits of a claim, or the applicability
of defenses.”

Republican Party of N.C. v. Martin, 980 F.2d 943,

952 (4th Cir. 1992).

“To survive a motion to dismiss, a complaint

must 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 Atl. Corp. v.
Twombly, 550 U.S. 544, 570 (2007)). 1

The court “must accept as

true all of the factual allegations contained in the complaint,”
Erickson v. Pardus, 551 U.S. 89, 94 (2007) (per curiam) (citations
omitted), and all reasonable inferences must be drawn in the
plaintiff’s favor, Ibarra v. United States, 120 F.3d 472, 474 (4th
Cir. 1997).

This means a plaintiff must “plead[] factual content

that allows the court to draw the reasonable inference that the
defendant is liable” and must demonstrate “more than a sheer
possibility that a defendant has acted unlawfully.”

1

Iqbal, 556

Cody Creek’s statement that a motion to dismiss cannot be granted
unless “it is clear that no relief could be granted under any set of
facts that could be proved consistent with the allegations” (Doc. 15 at
4 (citation omitted)) conjures up a prior standard disavowed by Twombly,
a case it also cites. Twombly, 550 U.S. at 563 (noting that the “no set
of facts” language “has earned its retirement” and “is best forgotten
as an incomplete, negative gloss on an accepted pleading standard”).

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U.S. at 678 (citing Twombly, 550 U.S. at 556).

While “the

complaint, including all reasonable inferences therefrom, [is]
liberally construed in the plaintiff’s favor,” this “does not mean
that the court can ignore a clear failure in the pleadings to
allege any facts [that] set forth a claim.”

Estate of Williams-

Moore v. All. One Receivables Mgmt., Inc., 335 F. Supp. 2d 636,
646 (M.D.N.C. 2004) (citing McNair v. Lend Lease Trucks, Inc., 95
F.3d 325, 327 (4th Cir. 1996)).

Mere legal conclusions are not

accepted as true, and “[t]hreadbare recitals of the elements of a
cause of action, supported by mere conclusory statements, do not
suffice.”

Iqbal, 556 U.S. at 678.

The only cause of action Cody Creek construes its complaint
to raise is for a constructive trust.
5-10.)

(See generally Doc. 15 at

Defendants argue that North Carolina does not recognize

any such cause of action; rather, a constructive trust is an
equitable remedy for other claims.

(Doc. 14 at 9-10.)

The only

plausible claim raised by the complaint, Defendants argue, is for
unjust enrichment, which they contend is long since time-barred.
(Id. at 5-9; Doc. 19 at 2-3.)
Cody Creek does not defend against this argument or construe
its complaint to include a claim for unjust enrichment.

It

therefore has waived any right to contest Defendants’ contention
in this regard.

See Landress v. Tier One Solar LLC, No. 1:15CV354,

2017 WL 1066648, at *2 n.7 (M.D.N.C. Mar. 21, 2017) (noting that
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where a party fails to develop an issue in its brief, courts have
deemed the issue waived (citing Belk, Inc. v. Meyer Corp., U.S.,
679 F.3d 146, 152 n.4 (4th Cir. 2012))).

However, because even an

unopposed motion to dismiss must be supported by the record, the
court

must

satisfy

itself

that

limitations for the reasons stated.

the

complaint

is

barred

by

See Stevenson v. City of Seat

Pleasant, 743 F.3d 411, 416 n.3 (4th Cir. 2014) (explaining that
“[e]ven though [the plaintiffs] did not challenge the motions to
dismiss, . . . the district court nevertheless has an obligation
to review the motions to ensure that dismissal is proper”); accord
Gardendance, Inc. v. Woodstock Copperworks, Ltd., 230 F.R.D. 438,
449 (M.D.N.C. 2005) (“As with summary judgment motions, a court
does

not

grant

uncontested.

a

motion

for

dismissal

merely

because

it

is

Rather, a district court should review a motion to

dismiss on its merits to determine whether the pleadings are
sufficient.”).
Defendants bear the burden of proof that the statute of
limitations, an affirmative defense, bars the claim.

Fed. R. Civ.

P. 8(c)(1); Stack v. Abbott Labs., Inc., 979 F. Supp. 2d 658, 664
(M.D.N.C. 2013).

A court can reach the merits of a limitations

issue at the Rule 12(b)(6) stage only “if all facts necessary to
the [statute of limitations] defense ‘clearly appear[] on the face
of the complaint.’”

Stack, 979 F. Supp. 2d at 664 (quoting Goodman

v. Praxair, Inc., 494 F.3d 458, 464 (4th Cir. 2007)) (alteration
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in original).
“A claim for unjust enrichment is subject to a three year
statute of limitations period that runs from the date the claim
accrues.”

Celgard, LLC v. LG Chem, Ltd., No. 3:14-CV-00043-MOC-

DC, 2015 WL 2412467, at *16 (W.D.N.C. May 21, 2015).
enrichment claim accrues “when the wrong is complete.”

An unjust
Mountain

Land Properties, Inc. v. Lovell, 46 F. Supp. 3d 609, 626 (W.D.N.C.
2014).

Here, the last alleged wrongdoing took place on March 16,

2012, when the Whites’ last payment to Defendants drawn on a Cody
Creek check was made.

(Doc. 7 at 3, ¶ 19.)

Because this occurred

four years before the present action was filed, the claim is
facially time-barred.
Cody Creek does not argue, nor does North Carolina appear to
recognize, a discovery rule for unjust enrichment claims that would
toll the limitations period.

See Housecalls Home Health Care,

Inc. v. State, Dep’t of Health and Human Servs., 200 N.C. App. 66,
73, 682 S.E.2d 741, 746 (2009) (Geer, J., concurring) (noting that
North Carolina does not recognize a discovery rule for unjust
enrichment claims); Stratton v. Royal Bank of Canada, 211 N.C.
App.

78,

83,

712

S.E.2d

221,

227

(2011)

(holding

that

the

“discovery rule” does not apply to claims for unjust enrichment).
While Cody Creek does not argue it, North Carolina law estops
a defendant from raising a statute of limitations defense where he
seeks to use it not as a shield but “as a sword, so as to unjustly
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benefit from his own conduct which induced a plaintiff to delay
filing suit.”

Friedland v. Gales, 131 N.C. App. 802, 806, 509

S.E.2d 793, 796 (1998) (citations omitted); see also Nowell v.
Great Atl. & Pac. Tea Co., 250 N.C. 575, 579, 108 S.E.2d 889, 891
(1959) (“[E]quity will deny the right to assert [a statute of
limitations] when delay has been induced by acts, representations,
or conduct, the repudiation of which would amount to a breach of
good faith.”).

But this doctrine applies only when a defendant’s

acts induce a plaintiff “to believe that certain facts exist” and
the plaintiff “rightfully relies and acts upon that belief to his
detriment.”

Jordan v. Crew, 125 N.C. App. 712, 720, 482 S.E.2d

735, 739 (1997) (citation omitted).
allege

that

Defendants

“knew

or

Cody Creek’s complaint does

should

have

known”

that

the

payments they received were made with Cody Creek’s funds without
its authorization.

(E.g., Doc. 7 at 3, ¶ 22.)

But it does not

allege that Cody Creek relied on anything Defendants said or did,
or that they ever induced Cody Creek to delay filing its action
within the statute of limitations.

Defendants are therefore not

estopped from asserting the statute of limitations.
This leaves Cody Creek’s argument that its claim is timely
because

it

alleges

a

constructive

trust

that

enjoys

North

Carolina’s ten-year statute of limitations contained in North
Carolina General Statute § 1-56.

(Doc. 15 at 10-16.)

Under North Carolina law, a constructive trust is a remedy
7

for otherwise-established wrongs, not a freestanding cause of
action.

New Amsterdam Cas. Co. v. Waller, 301 F.2d 839, 842 (4th

Cir. 1962) (applying North Carolina law) (“A constructive trust is
merely a procedural device by which a court of equity may rectify
certain wrongs.

It is suggestive of a power which a court of

equity may exercise in an appropriate case, but it is not a
designation of the cause of action which justifies an exercise of
the power.”); id. at 844 (“A declaration that [the plaintiff] is
a constructive trustee is an appropriate remedial step, but it is
not descriptive of the substantive right . . . .”); Danielson v.
Human, No. 3:12-CV-00840-FDW, 2014 WL 1765168, at *5 n.4 (W.D.N.C.
May 2, 2014) (applying North Carolina law) (“Plaintiff also asserts
a cause of action for ‘Constructive Trust.’

The Court fails to

find any cause of action in North Carolina law for constructive
trust . . . .”); John Boyle & Co. v. Fasano, No. CIV. 5:03CV47-V,
2006 WL 572183, at *1 n.3 (W.D.N.C. Mar. 3, 2006) (applying North
Carolina law) (“[C]onstructive trust is a remedy rather than a
separate cause of action or legal theory . . . .”).
Because a constructive trust is a remedy under North Carolina
law, the applicable statute of limitations for a claim seeking a
constructive trust is the limitations for the underlying cause of
action.

See New Amsterdam, 301 F.2d at 842 (“For purposes of

limitations, . . . the North Carolina Court has looked to the
nature of the right of the litigant which calls for judicial aid,
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not to the nature of the remedy to rectify the wrong.”).
Creek does not identify any cognizable cause of action.

Cody

The only

cause of action identified, by Defendants – unjust enrichment - is
time-barred for the reasons discussed above.
Cody Creek maintains that a constructive trust is a separate
cause of action, relying on a handful of cases.
them.

But it misreads

The plaintiffs in those cases sought constructive trusts

only as remedies for other legal harms.

See, e.g., Howell v.

Alexander, 3 N.C. App. 371, 374, 165 S.E.2d 256, 259 (1969)
(stating that the plaintiff brought the action “to have the court
declare that [she] is the owner of a life estate” in the property
on which she sought to impose a constructive trust); Huff v. Trent
Acad. of Basic Ed. Inc., 53 N.C. App. 113, 114-15, 280 S.E.2d 17,
17-18 (1981) (noting that “[t]his is an action based on a claim
for restitution” and that the defendant had been “unjustly enriched
at the expense of the Bank”).

Here, Cody Creek not only fails to

identify any viable underlying claim it seeks to remedy but has
abandoned the only claim Defendants have identified.
In

sum,

the

complaint

is

facially

time-barred,

and

Defendants’ motion to dismiss will be granted.
III. CONCLUSION
For the reasons set forth above, therefore,
IT IS ORDERED that Defendants’ motion to dismiss (Doc. 13) is
GRANTED and the complaint (Doc. 7) is DISMISSED WITH PREJUDICE.
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A

judgment

in

accordance

with

this

Order

will

issue

separately.

/s/
Thomas D. Schroeder
United States District Judge
July 25, 2017

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