United States District Court, E.D. North Carolina, Western Division
RANDY R. ROMFO, Plaintiff,
SCOTTSDALE INSURANCE COMPANY, Defendant.
C. DEVER III CHIEF UNITED STATES DISTRICT JUDGE.
September 25, 2017, Scottsdale Insurance Company
("Scottsdale" or "defendant") moved to
dismiss Randy Romfo's ("Romfo" or
"plaintiff') complaint for failure to state a claim
upon which relief can be granted [D.E. 9] and filed a
memorandum in support [D.E. 10]. Scottsdale contends that the
statute of limitations bars Romfo's breach of contract
claim and that Romfo lacks standing to seek declaratory
relief. On October 10, 2017, Romfo responded in opposition
[D.E. 11]. On October 24, 2017, Scottsdale replied [D.E. 12].
As explained below, the court denies Scottsdale's motion
January 10, 2007, Romfo sued Stephen J. Witt
("Witt") and C&S Tree Service Inc.
("C&S Tree") in Wayne County Superior Court for
negligence. See Compl. [D.E. 1-1] ¶¶ 7-8. Romfo
alleged that he sustained severe injuries on January 30,
2004, due to Witt's negligent removal of a tree that
occurred on a job site where Romfo was working as an
independent contractor. See id. ¶¶ 8-9. On
June 24, 2008, in Wayne County Superior Court, Witt and
C&S Tree were found liable to Romfo. See Id.
¶ 42. On August 11, 2008, Wayne County Superior Court
conducted a hearing on damages, and on August 12, 2008, that
court entered judgment against Witt and C&S Tree in the
amount of $1.5 million plus costs. See Id.
1, 2017, the Wayne County Clerk of Court issued a writ of
execution for the judgment See Id. ¶ 47. On
June 30, 2017, the writ of execution was returned
unsatisfied. See Id. ¶ 49. Romfo then asked
Scottsdale (who insured Witt on January 30, 2004) to pay the
judgment and Scottsdale refused. See Id.
¶¶ 49-50. Scottsdale's commercial general
liability insurance policy provided coverage in the amount of
$500, 000 per occurrence and up to $5, 000 for medical
expenses. See id. ¶¶ 15-17.
seeks a declaratory judgment that Scottsdale is responsible
for paying the judgment. See id ¶ 53. Romfo
also asserts a breach of contract claim. See id.
¶¶ 72-76. Both claims arise under North Carolina
law. Romfo contends that Scottsdale breached its duties under
the insurance policy, which required it to defend and
indemnify Witt. See Id. ¶ 73. Romfo states that
he is an intended third-party beneficiary of the insurance
policy and has suffered damages due to the breach of
contract. See id. ¶ 74-75. Romfo requests
relief for the entire amount of judgment entered against Witt
plus interest and costs. See id. ¶ 76.
responds that the three-year statute of limitations under
North Carolina law bars Romfo's breach of contract claim
because the statute of limitations began to run on August 12,
2008, when Romfo obtained the judgment against Witt. See
[D.E. 10] 4-5. Scottsdale also contends that Romfo lacks
standing to seek declaratory relief because the statute of
limitations bars bis third-party beneficiary claim, and he
has no direct cause of action under the insurance policy
because he was not in privity with Scottsdale. See [D.E. 9]
¶¶ 3-4. Romfo replies that the three-year statute
of limitations did not begin to run until the judgment
against Witt was returned unsatisfied on June 30, 2017. See
court has subject-matter jurisdiction based on diversity.
Thus, the court applies state substantive law and federal
procedural rules. See Erie R.R. v. Tompkins, 304
U.S. 64, 78-80 (1938); Dixon v. Edwards. 290 F.3d
699, 710 (4th Cir. 2002).
motion to dismiss under Rule 12(b)(6) tests the legal and
factual sufficiency of the complaint. See Fed.R.Civ.P.
12(b)(6); Ashcroft v. Iqbal. 556 U.S. 662, 678
(2009); Bell Atl. Corp. v. Twombly. 550 U.S. 544,
570 (2007); Coleman v. Md. Court of Appeals. 626
F.3d 187, 190 (4th Cir. 2010), affd, 566 U.S. 30 (2012);
Giarratano v. Johnson. 521 F.3d 298, 302 (4th Cir.
2008); accord Erickson v. Parous. 551 U.S. 89, 93-94
(2007) (per curiam). The court "accepts all well-pled
facts as true and construes these facts in the light most
favorable to the plaintiff in weighing the legal sufficiency
of the complaint." Nemet Chevrolet Ltd. v.
Consumeraffairs.com. Inc., 591 F.3d 250, 255 (4th Cir.
2009); see Burbach Broad. Co. of Del, v. Elkins Radio
Corp.. 278 F.3d 401, 405-06 (4th Cir. 2002). The court
need not, however, accept as true a complaint's
"legal conclusions, elements of a cause of action, and
bare assertions devoid of further factual enhancement."
Nemet Chevrolet Ltd.. 591 F.3d at 255. Moreover,
this court can consider documents if they are integral to and
explicitly relied on in the complaint, and their authenticity
is undisputed. See Occupy Columbia v. Haley. 738
F.3d 107, 117 n.7 (4th Cir. 2013).
motion to dismiss under Rule 12(b)(6) "generally cannot
reach the merits of an affirmative defense, such as the
defense that the plaintiffs claim is time-barred."
Goodman v. Praxair. Inc.. 494 F.3d 458, 464 (4th
Cir. 2007) (en banc). Nevertheless, a district court may
reach the merits of an affirmative defense "if all facts
necessary to the affirmative defense clearly appear on the
face of the complaint." Id. (emphasis and
alteration omitted). "A complaint showing that the
statute of limitations has run on the claim is the most
common situation in which the affirmative defense appears on
the face of the pleading, rendering dismissal
appropriate." Brooks v. City of Winston-Salem. N.C.
. 85 F.3d 178. 181 (4th Cir. 1996) (quotation omitted).
Thus, failure to comply with the statute of limitations is
"a recognized basis for dismissal" under Rule
12(b)(6). Evans v. Trinity Indus.. Inc.. 137
F.Supp.3d 877, 881 (E.D. Va. 2015); see Brooks. 85
F.3d at 181; West v. ITT Cont'1 Baking Co., 683
F.2d 845, 846 (4th Cir. 1982).
motion to dismiss requires the court to consider the
parties' state-law claims and defenses, and the parties
agree that North Carolina law applies. Accordingly, this
court must predict how the Supreme Court of North Carolina
would rule on any disputed state-law issue. See Twin City
Fire Ins. Co. v. Ben Arnold-Sunbelt Beverage Co. of
S.C.. 433 F.3d 365, 369 (4th Cir. 2005). In doing so,
the court must look first to opinions of the Supreme Court of
North Carolina. See Stahle v. CTS Corp.. 817 F.3d
96, 100 (4th Cir. 2016). If there are no governing opinions
from that court, this court may consider the opinions of
North Carolina Court of Appeals, treatises, and "the
practices of other states." Twin City Fire Tns.
Co., 433 F.3d at 369 (quotation and citation
omitted). In doing so, this court "should not
create or expand a [s]tate's public policy."
Time Warner Enrm't-Advance/Newhouse P'ship v.
Carteret-Craven Elec. Membership Corp.. 506 F.3d 304,
314 (4th Cir. 2007) (alteration and quotation omitted); see
Wade v. Danek Med.. Inc.. 182 F.3d 281, 286 (4th
Cir. 1999). Moreover, in predicting how the highest court of
a state would address an issue that it has not yet resolved,
this court must "follow the decision of an intermediate
state appellate court unless there is persuasive data that
the highest court would decide differently."
Toloczko, 728 F.3d at 398 (quotation omitted).
North Carolina law* the statute of limitations for breach of
contract is three years and begins to run "as soon as
the right to institute and maintain a suit arises."
Penley v. Penley. 314 N.C. 1, 20, 332 S.E.2d 51, 62
(1985). Thus, the dispute about the statute of limitations
turns on when Romfo's right to institute and maintain
this action against Scottsdale arose.
Taylor v. Green. the plaintiff sued the defendant
for negligence arising from an automobile accident. 242 N.C.
156, 157, 87 S.E.2d 11, 12-13 (1955). The plaintiff sought to
join the defendant's automobile insurer as a party
defendant. See Id. at 157-58, 87 S.E.2d at 13. The
Supreme Court of North Carolina rejected the joinder and
discussed why an insurer may not be made a party "in an
action in tort against its insured." Id. at 15
8, 87 S .E.2d at 13. First, the Supreme Court of North
Carolina observed that no privity exists between the insurer
and the injured third party. See id. The Supreme
Court of North Carolina then held that absent "an
enabling statute... or a policy provision having that effect,
the [third party] may not proceed against the insurer, at
least not until he has secured a judgment against the insured
with an execution thereon returned unsatisfied."
Id., 87 S.E.2d. at 13; see Small v.
Morrison. 185 N.C. 577, 118 S.E. 12, 12 (1923);
Selective Ins. Co. v. Mid-Carolina Insulation Co..126 N.C.App. 217, 220, 484 S.E.2d 443, 445 (1997). Thus, this
court predicts that the ...