Gantt v. City of Hickory

• Court: Court of Appeals of North Carolina
• Decided: September 5, 2023
• Docket: 21-767-2
• Status: Published

Opinion

IN THE COURT OF APPEALS OF NORTH CAROLINA

No. COA21-767-2

Filed 05 September 2023

Catawba County, No. 20 CVS 1183

GARY GANTT d/b/a GANTT CONSTRUCTION, Plaintiff,

v.

CITY OF HICKORY, Defendant.

Appeal by Plaintiff from judgment entered 15 July 2021 by Judge Nathaniel J.

Poovey in Catawba County Superior Court. Originally heard in the Court of Appeals

10 August 2022. Petition for Rehearing allowed 6 March 2023.

Milberg Coleman Bryson Phillips Grossman, PLLC, by James R. DeMay, Daniel K. Bryson, Scott C. Harris, and John Hunter Bryson, for Plaintiff- Appellant.

Young, Morphis, Bach & Taylor, LLP, by Paul E. Culpepper and Timothy D. Swanson, for Defendant-Appellee.

CARPENTER, Judge.

On 29 December 2022, this Court filed an opinion in Gantt v. City of Hickory,

287 N.C. App. 393, 881 S.E.2d 760 (Dec. 29, 2022) (unpublished) (“Gantt I”), in which

we affirmed the trial court’s order granting summary judgment for the City of

Hickory (“Defendant”) and dismissing the claims brought by Gary Gantt d/b/a Gantt

Construction (“Plaintiff”). On 2 February 2023, Plaintiff filed a petition for rehearing

(the “Petition”) pursuant to Rule 31 of the North Carolina Rules of Appellate GANTT V. CITY OF HICKORY

Opinion of the Court

Procedure. In the Petition, Plaintiff contends our holding in Gantt I “conflicts with

the longstanding principle of relation back and a prior panel’s published opinion.”

Due to the gravity of Plaintiff's contentions and the dearth of binding precedent

concerning whether a plaintiff may benefit from the doctrine of relation back when

an action is initiated under the name of a different, out-of-state entity that had no

interest in the subject matter, and therefore lacked standing to bring the lawsuit, we

allowed the Petition and supplemental briefing on 6 March 2023. After careful

consideration of the Petition and the supplemental briefs, we again affirm the order

of the trial court with a more robust explanation of our reasoning.

I. Factual and Procedural Background

The facts of this case are set out in Gantt I, and we will not fully restate them

here. The relevant procedural history is as follows: This action commenced with the

filing of a complaint in Catawba County under file number 19-CVS-106, with Gantt

Construction Co. identified as the plaintiff, seeking a refund, on behalf of Plaintiff

and a putative class of all natural persons, corporations, and other entities who at

any time from 11 January 2016 through 30 June 2018 paid capacity charges to

Defendant pursuant to the schedule of fees and/or Code of Ordinances adopted by

Defendant. The complaint in the 19-CVS-106 action (“Original Complaint”) was filed

on 11 January 2019, within three years of the payment on 14 November 2016, the

date Plaintiff alleges his injury occurred and his claim arose. On 18 February 2020,

the Original Complaint was voluntarily dismissed without prejudice, and the

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complaint was refiled on or about 28 April 2020 (“Second Complaint”) asserting

identical claims.

Gantt Construction Co., a “corporation organized and existing under the laws

of the State of Texas with its principal place of business in Texas[,]” was the named

plaintiff in both the Original Complaint and the Second Complaint. Gary Gantt’s 18

February 2020 affidavit indicated Gantt Construction Co. maintained a physical

office in Hickory, North Carolina. Evidently, a Texas corporation named Gantt

Construction Co. does exist; however, it is not owned, operated, or otherwise affiliated

with the individual, Gary Gantt. Gary Gantt operates his construction business as a

sole proprietorship in North Carolina—filing tax returns for his business under his

individual name—not a corporate entity. Deposition testimony also established that

Gary Gantt had not filed an assumed business name certificate to transact business

in North Carolina as Gantt Construction.

On 11 December 2020, after Gary Gantt’s deposition testimony revealed the

Texas corporation did not pay the capacity fees in question, a motion was filed seeking

to amend the Second Complaint to substitute the name of the plaintiff to “Gary Gantt

d/b/a Gantt Construction.” The trial court granted the motion by order entered on 12

January 2021, and Plaintiff filed an amended complaint on 13 January 2021

(“Amended Complaint”), marking the first appearance of Gary Gantt d/b/a Gantt

Construction as a party to the action and simultaneously removing the Texas

corporation (Gantt Construction Co.) as a named plaintiff. Also on 11 December 2020,

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Gantt Construction Co. purported to file a motion for class certification, which was

amended on 29 January 2021, heard on 15 February 2021, and granted in part on 22

February 2021.

Plaintiff, now Gary Gantt d/b/a Gantt Construction, filed a motion for

summary judgment on 30 April 2021, which Defendant simultaneously opposed and

moved that judgment be entered in its favor as the non-moving party per Rule 56(c).

The trial court entered an order granting summary judgment for Defendant on 15

July 2021. On 19 July 2021, Plaintiff filed timely notice of appeal.

II. Analysis

A. Purported Conflict with Precedent

On rehearing, Plaintiff argues Gantt I conflicts with and alters precedent and

established principles regarding the doctrine of relation back. Specifically, Plaintiff

contends the initial opinion is inconsistent with Burcl v. North Carolina Baptist

Hospital, Inc., 306 N.C. 214, 293 S.E.2d 85 (1982) and Estate of Tallman ex rel.

Tallman v. City of Gastonia, 200 N.C. App. 13, 682 S.E.2d 428 (2009). According to

Plaintiff, the holdings of Burcl and Tallman compel this Court to hold that the

Amended Complaint relates back to both the Original Complaint and the Second

Complaint because each pleading gave Defendant full notice of the transactions and

occurrences upon which Plaintiff’s claim is based. We disagree.

In Burcl, the North Carolina Supreme Court held that where “the original

pleading gives notice of the transactions and occurrences upon which the claim is

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based, a[n amended] pleading that merely changes the capacity in which the plaintiff

sues[,] relates back to the commencement of the action pursuant to Rule 15(c).” 306

N.C. at 228, 293 S.E.2d at 94. In Tallman, this Court held the appointment of the

plaintiff as administratrix of her deceased husband’s estate after the statute of

limitations had run, related back to the filing of the summons pursuant to Rules 15(c)

and 17(a) because the defendant had full notice of the transactions and occurrences

upon which the claim was based. 200 N.C. App. at 22, 682 S.E.2d at 434.

This case is distinguishable from both Burcl and Tallman because those cases

required amendments to alter a party’s legal capacity to sue, and neither involved a

voluntary dismissal under Rule 41. See Burcl, 306 N.C. at 216, 293 S.E.2d at 87;

Tallman, 200 N.C. App. at 22, 682 S.E.2d at 434. Although notice may be the relevant

inquiry under Burcl and Tallman, those cases only address relation back under Rules

15 and 17. See Burcl, 306 N.C. at 224, 293 S.E.2d at 91; Tallman, 200 N.C. App. at

23, 682 S.E.2d at 434–35.

Rule 41 does not pertain to amendments but instead concerns new filings of

pleadings that have been voluntarily dismissed. N.C. R. Civ. P. 41(a). Plaintiff is

incorrect in asserting that notice is also the determinative inquiry for the relation-

back analysis under Rule 41. See Cherokee Ins. Co. By & Through Weed v. R/I, Inc.,

97 N.C. App. 295, 297, 288 S.E.2d 239, 240 (1990) (rejecting the plaintiff’s argument

that—although the two complaints named two separate and distinct legal entities,

which shared an address and officers, as defendants—the plaintiff was entitled to

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relation back under Rule 41 because the initial filing and the surrounding

circumstances provided actual notice to the correct defendant), disc. review denied,

326 N.C. 594, 393 S.E.2d 875 (1990).

Because the complaints in this case involve two separate and distinct legal

entities as party plaintiffs—one of which lacked standing to bring the initial suit—

rather than one party whose capacity to sue has changed, Gantt I neither conflicts

with nor disrupts the precedent set forth in Burcl and Tallman.

B. Relation Back Under Rule 41(a)

Plaintiff’s theory of this case requires us to read Rules 41, 15, and 17 of the

North Carolina Rules of Civil Procedure in conjunction, and we must agree with

Plaintiff’s interpretation of each Rule as applied to this case for Plaintiff to prevail on

appeal. For the reasons stated below, we conclude Plaintiff cannot clear the first of

these procedural hurdles because he is not entitled to relation back under Rule 41.

The record is clear that the Original Complaint was filed with a corporation

organized under the laws of Texas as the named plaintiff. The record is similarly

clear that the Second Complaint was brought with the same Texas corporation as the

named plaintiff in the action. It further appears from the record that Plaintiff’s first

purported appearance in the action came after the Original Complaint was dismissed,

after the Second Complaint had been filed, and after the trial court granted a motion

to amend the Second Complaint.

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Plaintiff argues that under Rule 41, the Second Complaint, filed on or about

28 April 2020 and amended with leave of court on 13 January 2021, relates back to

the Original Complaint, filed on 11 January 2019 and voluntarily dismissed on 18

February 2020, because the Original Complaint: (1) complied with all Rules

governing its form and content,1 (2) was filed prior to the expiration of the statute of

limitations for the claims asserted, and (3) gave Defendant full notice of the

transactions and occurrences that formed the basis of Plaintiff’s claim in this action.

Defendant avers Rule 41 may be invoked where a subsequent complaint relates back

to an action previously dismissed without prejudice but argues Rule 41 may only be

utilized if the second action involves the same parties. We agree with Defendant

because where an initial action, as here, involves a plaintiff who lacked standing to

bring suit, the initial complaint is a nullity, and thus, there is no valid complaint to

which an amended complaint may relate back.

North Carolina Rule of Civil Procedure 41(a) provides, in relevant part:

(a) Voluntary dismissal; effect thereof.-- (1) By Plaintiff; by Stipulation. . . . If an action commenced within the time prescribed therefor, or any claim therein, is dismissed without prejudice under this subsection, a new action based on the same claim may be commenced within one year after such dismissal unless a stipulation filed

1 To benefit from the Rule 41 extension, “the initial complaint must conform in all respects to

the rules of pleading contained in Rules 8, 9, 10, and 11 of the North Carolina Rules of Civil Procedure.” Murphy v. Hinton, 242 N.C. App. 95, 100, 773 S.E.2d 355, 359 (2015). Rule 10 provides that a complaint “shall include the names of all the parties[.]” N.C. R. Civ. P. 10(a). Because a separate and distinct legal entity filed the initial pleadings as the named plaintiff in this case, the Original Complaint did not “conform in all respects” to the rules of pleading. See Murphy, 242 N.C. App at 100, 773 S.E.2d at 359.

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under (ii) of this subsection shall specify a shorter time.

N.C. Gen. Stat. § 1A-1, R. 41(a) (2021).

“To benefit from the one[-]year extension of the statute of limitation [in Rule

41], the second action must be substantially the same, involving the same parties, the

same cause of action, and the same right . . . .” Cherokee, 97 N.C. App. at 297, 388

S.E.2d at 240 (citations and internal quotations omitted); see Royster v. McNamara,

218 N.C. App. 520, 531, 723 S.E.2d 122, 130 (2012) (quoting Holley v. Hercules,

Inc., 86 N.C. App. 624, 628, 359 S.E.2d 47, 50 (1987) (“Rule 41(a)(1) extends the time

within which a party may refile suit after taking a voluntary dismissal when the

refiled suit involves the same parties, rights and cause of action as in the first

action.”)).

“Standing refers to whether a party has a sufficient stake in an otherwise

justiciable controversy so as to properly seek adjudication of the matter.” Coderre v.

Futrell, 224 N.C. App. 454, 457, 736 S.E.2d 784, 786 (2012) (quoting Woodring v.

Swieter, 180 N.C. App. 362, 366, 637 S.E.2d 269, 274 (2006)). “A party has standing

to initiate a lawsuit if he is a real party in interest.” Green Tree Servicing LLC v.

Locklear, 236 N.C. App. 514, 519, 763 S.E.2d 523, 526 (2014) (internal quotations and

citation omitted). “If a party does not have standing to bring a claim, a court has no

subject matter jurisdiction to hear the claim.” Coderre, 224 N.C. App. at 457, 736

S.E.2d at 786–87 (internal citations and quotations omitted). “The question of subject

matter jurisdiction may be raised at any time,” even for the first time on appeal. See

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Lemmerman v. A.T. Williams Oil Co., 318 N.C. 577, 580, 350 S.E.2d 83, 85 (1986)

(internal citation omitted).

Furthermore, where a plaintiff lacked standing to file the initial complaint,

that complaint is a “nullity” leaving “no valid complaint to which [an] amended

complaint could relate back.” See Coderre, 224 N.C. App. at 457, 736 S.E.2d at 787

(holding that where a shareholder of a corporation filed suit for breach of a contract

to which he was not a party, the lack of standing rendered the initial complaint a

nullity such that the amended complaint, adding the corporation as a plaintiff, could

not relate back to the initial complaint to prevent the claim from being time-barred);

see also WLAE, LLC v. Edwards, 257 N.C. App. 251, 260, 809 S.E.2d 176, 182–83

(2017) (holding where the trial court did not have subject matter jurisdiction over the

proceeding at the time of filing, the court did not have authority to order substitution

of the parties under Rule 17(a), and any attempt to do so would have been a nullity

because no valid action existed for the real party in interest to ratify).

Plaintiff asserts this Court “erred in concluding that Cherokee, Royster, and

Holley compelled it to deny relation back to Plaintiff’s claims to the date the [Original

Complaint] was filed.” Specifically, Plaintiff argues this case is distinguishable from

those cases because “none of them involved the amendment of the capacity of the

plaintiff when the defendant otherwise had full notice of the transactions and

occurrences that formed the basis for the claims.” We disagree.

Here, there is not a problem with the capacity of the correct plaintiff to sue.

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Rather, a wholly distinct, disinterested, and incorrect entity brought the action as the

named plaintiff in both the Original Complaint and the Second Complaint. Although

Cherokee involves a case where the plaintiff sought to amend the name of the

defendant, the plain language of Cherokee is not limited to substitutions of a

defendant. See Cherokee, 97 N.C. App. 295, 388 S.E.2d 239. As Defendant correctly

notes, had the Cherokee Court intended for the rule to apply only to situations where

the plaintiff seeks to change the name of the defendant, it would have specified the

defendants must be the same rather than the parties must be the same. Indeed, the

Cherokee opinion notes, “here the allegations and the plaintiff in both complaints are

substantially the same” before holding that the plaintiff was not entitled to relation

back under Rule 41 because the defendants were two separate and distinct entities.

See id. at 299, 388 S.E.2d at 241.

Furthermore, this Court has suggested that to benefit from the one-year

extension afforded by Rule 41(a), subsequent complaints must be filed by the same

plaintiff. See Revolutionary Concepts, Inc. v. Clements Walker PLLC, 277 N.C. App.

102, 111, 744 S.E.2d 130, 136 (2013) (holding the trial court correctly concluded that

where the original plaintiff RCI-NC merged with RCI-NV after taking a voluntary

dismissal pursuant to Rule 41(a), “any claims RCI-NV acquired from RCI-NC by

virtue of the merger had to be filed either by post-merger RCI-NV, identifying itself

as the surviving entity . . . or by RCI-NC.”). As discussed in subsection A, Plaintiff’s

reliance on the principle of notice is misguided; notice is not the determinative inquiry

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for relation back under Rule 41. See Cherokee, 97 N.C. App. at 297, 388 S.E.2d at

240.

We agree with Plaintiff that at all relevant times, “Gary Gantt d/b/a Gantt

Construction” was the real party in interest in this matter.2 Unfortunately for

Plaintiff, “Gary Gantt d/b/a Gantt Construction” is not the entity that timely filed

suit in 2019. Therefore, we reject Plaintiff’s argument that “as a practical matter the

2019 and 2020 actions [ ] involve the same parties” because the original named

plaintiff lacked standing. In the instant case, two separate and distinct legal entities

filed pleadings as the named plaintiff: “Gantt Construction Company[,] . . . a

corporation organized and existing under the laws of the State of Texas with its

principal place of business in Texas[,]” filed complaints on 11 January 2019 and on

or about 28 April 2020; meanwhile, “Gary Gantt d/b/a Gantt Construction” filed the

Amended Complaint with leave of court on 13 January 2021. It is “well established”

under the law that to benefit from the one-year extension provided by Rule 41,

following the first and only voluntary dismissal, the refiled suit must involve the

“same parties[.]” Renegar v. R.J. Reynolds Tobacco Co., 145 N.C. App. 78, 84, 549

S.E.2d 227, 232 (2001) (citing Cherokee Ins. Co., 97 N.C. App. at 297, 388 S.E.2d at

2 On 12 January 2021, the trial court granted Plaintiff’s motion to amend the Second Complaint allowing a substitution of the real party in interest pursuant to Rules 15 and 17 of the North Carolina Rules of Civil Procedure. Although Defendant did not cross-appeal from that order, we note the issue of a defect in subject matter jurisdiction may be raised at any time. See Lemmerman, 318 N.C. at 580, 350 S.E.2d at 85; see also WLAE, 257 N.C. App. at 260, 809 S.E.2d at 182–83.

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240). “Gary Gantt d/b/a Gantt Construction” is neither a corporation nor incorporated

under the laws of Texas and is therefore not the same party as Gantt Construction

Co., the named plaintiff that initiated this action.

Here, Gantt Construction Co. was not a real party in interest because it neither

owned the property subject to the capacity fees nor paid the capacity fees, and

therefore had no standing to bring the initial claim. See Locklear, 236 N.C. App. at

519, 763 S.E.2d at 526. Gantt Construction Co. did not have standing to bring the

Original Complaint; hence, the trial court lacked subject matter jurisdiction. See

Woodring, 180 N.C. App. at 366, 637 S.E.2d at 274. The trial court’s lack of subject

matter jurisdiction rendered the Original Complaint a nullity. See Coderre, 224 N.C.

App. at 457, 736 S.E.2d at 787. Because the Original Complaint was a nullity, there

is no valid action to which Plaintiff’s Amended Complaint could relate back under

Rule 41(a). See id. at 457, 736 S.E.2d at 787. Accordingly, we conclude that Plaintiff

cannot avail himself of relation back under Rule 41(a), because the second action does

not involve the “same parties” as the first, and the named plaintiff in the first action

lacked standing to bring suit against Defendant for assessing allegedly ultra vires

water capacity fees. See Cherokee Ins. Co., 97 N.C. App. at 297, 388 S.E.2d at 240;

see also Coderre, 224 N.C. App. at 457, 736 S.E.2d at 787.

Since the Second Complaint was not filed until on or about 28 April 2020, after

14 November 2019—the last date Plaintiff could have timely brought his action—and

Plaintiff may not benefit from relation back under Rule 41, Plaintiff’s claims are

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barred by the statute of limitations. See N.C. Gen. Stat. § 1-52(15). Therefore, the

trial court did not err in granting summary judgment for Defendant.

III. Conclusion

Based on the foregoing, we conclude Gantt I is not inconsistent with the

holdings of Burcl and Tallman and was properly decided; Plaintiff is not entitled to

relation back under Rule 41, and the party filing the Original Complaint and Second

Complaint had no standing to bring the suit. Therefore, we again affirm the trial

court’s order granting summary judgment to Defendant.

AFFIRMED

Judges MURPHY and STADING concur.

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