Federal Deposit Insurance v. Loft Apartments Ltd. Partnership

250 S.E.2d 693, 39 N.C. App. 473, 1979 N.C. App. LEXIS 2515

• Court: Court of Appeals of North Carolina
• Decided: January 16, 1979
• Docket: 7810SC210
• Status: Published

Opinion

HEDRICK, Judge.

The one question presented by this appeal is whether the trial court erred in allowing defendant’s motion to dismiss plaintiff’s action for failure to state a claim upon which relief could be granted pursuant to G.S. § 1A-1, Rule 12(b)(6).

In North Carolina a complaint should not be dismissed for failure to state a claim upon which relief can be granted unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim that would entitle him to relief. A complaint may be dismissed on motion if clearly without any merit; and this want of merit may consist in an absence of law to support a claim, or in the disclosure of some fact that will necessarily defeat the claim. But a complaint should not be dismissed for insufficiency unless it appears to a certainty that plaintiff is entitled to no relief under any state of facts that could be proved in support of the claim. Sutton v. Duke, 277 N.C. 94, 102-103, 176 S.E. 2d 161, 167 (1970); Gallimore v. Sink, 27 N.C. App. 65, 218 S.E. 2d 181 (1975).

When the complaint discloses on its face that plaintiff’s claim is barred by the statute of limitations, such defect may be taken advantage of by a motion to dismiss under Rule 12(b)(6). Travis v. McLaughlin, 29 N.C. App. 389, 224 S.E. 2d 243, cert. denied, 290 N.C. 555, 226 S.E. 2d 513 (1976); Teague v. Asheboro Motor Company, 14 N.C. App. 736, 189 S.E. 2d 671 (1972); Wright & Miller, Federal Practice and Procedure: Civil § 1357, at 608 (1969).

Defendants argue, and the trial court apparently agreed, that plaintiff’s claim was barred by three year statute of limitations set out in G.S. § 1-52, which provides:

Within three years an action —

(1) Upon a contract, obligation or liability arising out of a contract, express or implied, except those mentioned in the preceding sections.

(4) For taking, detaining, converting or injuring any goods or chattels, including action for their specific recovery.

Defendants’ contentions are summarized in their brief as follows:

Pefendants] contend that [plaintiff’s] rights in the collateral which is the subject of the security agreement in this case can rise no higher than the basic agreement upon which that security interest is founded and that when [plaintiff’s] rights under the security agreement became barred by the statute of limitations the rights in the collateral likewise became barred.

Defendants’ contentions presuppose that plaintiff’s claim is based on the contract, and that plaintiff’s action is to recover the property securing the debt. Plaintiff’s complaint alleges a claim for damages for wrongful conversion of its security interest in the property. Such an action may be maintained in North Carolina. Wall v. Colvard, Inc., 268 N.C. 43, 149 S.E. 2d 559 (1966); Credit Corp. v. Satterfield, 218 N.C. 298, 10 S.E. 2d 914 (1940). Plaintiff’s interest in the property arises from the security agreement contract, but its claim is not one “upon a contract, obligation or liability arising out of a contract,” and G.S. § 1-52(1) is not applicable.

Since plaintiff’s claim is for the wrongful conversion of its security interest in the property, G.S. § 1-52(4) is applicable. The period of the statute of limitations begins to run when the plaintiff’s right to maintain an action for the alleged wrong accrues. Wilson v. Crab Orchard Development Company, 276 N.C. 198, 171 S.E. 2d 873 (1970). There can be no conversion until some act is done that is a denial or violation of the plaintiff’s dominion over or rights in the property. Gallimore v. Sink, supra. Plaintiff has alleged that the acts constituting conversion occurred “subsequent to September 9, 1974.” At that time, plaintiff still had an interest in the property securing the debt, notwithstanding defendants’ contention that a default occurred on 7 August 1974 under the security agreement as a result of the filing of the petition for reorganization under the federal bankruptcy law. Assuming the truth of the allegations in the complaint, plaintiff has commenced the action within three years of the alleged acts of conversion, and the complaint does not reveal upon its face an insurmountable bar to plaintiff’s claim.

The order dismissing plaintiff’s complaint is reversed and the cause is remanded to the Superior Court for further proceedings.

Reversed and remanded.

Judges Parker and Erwin concur.