Fox v. Johnson , 2015 N.C. App. LEXIS 814 ( 2015 )

IN THE COURT OF APPEALS OF NORTH CAROLINA
No. COA15-206
Filed: 6 October 2015
Guilford County, No. 12 CVS 4940
WILLIAM THOMAS FOX and SCOTT EVERETT SANDERS, Plaintiffs,
v.
MITCHELL JOHNSON, TIMOTHY R. BELLAMY, GARY W. HASTINGS, and
MARTHA T. KELLY, in their individual capacities, Defendants.
Appeal by Defendants from order entered 25 September 2014 by Judge Ronald
E. Spivey in Guilford County Superior Court. Heard in the Court of Appeals 26
August 2015.
Morrow Porter Vermitsky Fowler and Taylor PLLC, by John C. Vermitsky, for
Plaintiffs.
Wilson Helms & Cartledge, LLP, by G. Gray Wilson, Stuart H. Russell, and
Lorin J. Lapidus, for Defendants.
STEPHENS, Judge.
In this appeal, we consider whether Plaintiffs’ malicious prosecution claims
under North Carolina law brought in Guilford County Superior Court are barred by
the doctrine of collateral estoppel as a result of the dismissal under Federal Rule of
Civil Procedure 12(b)(6) of certain federal law claims brought in Plaintiffs’ earlier
federal lawsuit against Defendants. Because we conclude that dismissal of federal
claims pursuant to Federal Rule 12(b)(6) is not an adjudication on the merits for
FOX V. JOHNSON
Opinion of the Court
purposes of collaterally estopping a plaintiff from raising the same issues under state
law in our State’s courts, we affirm the trial court’s order denying Defendants’ motion
to dismiss on the basis of collateral estoppel.
Factual and Procedural Background
This appeal arises from claims and counterclaims of racial discrimination,
misconduct, and conspiracies by various factions in the Greensboro Police
Department (“GPD”) and the government of the City of Greensboro (“the City”). In
simplified form, some African American GPD officers alleged that a secret unit of
Caucasian GPD officers was targeting them for improper investigations based on
their race, while some of the accused Caucasian officers denied those allegations and
instead asserted that they were the victims of racially motivated false claims and
criminal charges.
In June 2005, GPD Officer James Hinson and other African American GPD
officers accused then-GPD Chief David Wray of using certain Caucasian officers of
the Special Investigation Section (“SIS”), a subdivision of the GPD, to surveil and
target African American GPD officers. Officially, the SIS was tasked with duties such
as protecting celebrities who visited Greensboro, investigating allegations of criminal
activities by GPD officers, and handling other sensitive police matters.1
1 Prior to June 2005, Hinson himself had been investigated by the SIS for alleged police misconduct.
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Hinson alleged that one tool the SIS used in its supposed racial misconduct
against African American GPD officers was a binder containing photographs of
African American GPD officers known as the “black book.” The SIS did in fact have
a black binder which contained photo arrays of African American GPD officers, but
SIS officers asserted that the photos were only those officers who had been on duty
at the time of an alleged sexual assault by a uniformed African American GPD officer
and that the binder was shown only to the victim of the alleged sexual assault as part
of an SIS investigation into the matter.
After learning of Hinson’s claims, Defendant Mitchell Johnson, who was
employed by the City first as Assistant City Manager and later as City Manager, and
who also served on the City Council, met with attorneys representing some of the
African American GPD officers who made the allegations against the SIS. After that
meeting, Johnson instructed the City Attorney’s Office to initiate an investigation of
Plaintiffs William Thomas Fox and Scott Everett Sanders, two Caucasian GPD
officers alleged to have been part of the SIS group racially targeting African American
officers. Johnson and the City Council also contracted with Risk Management
Associates, Inc., (“RMA”) to conduct a private investigation of Plaintiffs and the SIS
to supplement the official City investigation. Plaintiffs contend that the
investigations were initiated by Johnson as part of a plan to pressure Wray into
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Opinion of the Court
resigning as well as to tarnish Plaintiffs’ own reputations and ultimately remove
them from their positions with the SIS.
In the midst of the official and private investigations, on 9 January 2006, Wray
resigned as GPD Chief, and Defendant Timothy R. Bellamy was appointed as acting
Chief and then Chief of the GPD. A few days later, the Federal Bureau of
Investigation (“FBI”) began its own investigation into the actions of Wray and
Plaintiffs. After learning that the FBI investigation revealed no evidence of civil
rights violations by Wray, Fox, or Sanders, Bellamy directed Johnson to request an
investigation by the State Bureau of Investigation (“SBI”). In the course of its
investigation, the SBI interviewed numerous GPD officers, including defendants
Gary R. Hastings and Martha T. Kelly. Plaintiffs contend that Bellamy and Johnson
sought the SBI investigation despite knowing that the allegations of wrongdoing by
Fox and Sanders were false. Plaintiffs further assert that Hastings and Kelly gave
false information to the SBI and destroyed and/or refused to turn over to the SBI
evidence and information that was favorable to Fox and Sanders. The SBI
investigation concluded in the fall of 2007, and resulted in the indictment of Fox on
one count each of felonious obstruction of justice and felonious conspiracy, while
Sanders was indicted on one count of accessing a government computer without
authorization, two counts of felonious obstruction of justice, and one count of felonious
conspiracy.
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Opinion of the Court
Following a trial in February 2009, a jury found Sanders not guilty of
improperly accessing a government computer. As a result of a post-trial Brady2
motion by Sanders, previously undisclosed statements came to light, leading to the
dismissal of all the remaining charges against both Plaintiffs. Plaintiffs contend
those exculpatory statements had been intentionally and maliciously suppressed by
Hastings and Kelly, among others, as part of a conspiracy against Plaintiffs.
Plaintiffs filed a complaint on 23 March 2010 against Johnson, Bellamy,
Hastings, and Kelly, as well as the City, RMA, and GPD officers John Slone and
Ernest Cuthbertson (collectively, “the federal defendants”) in the United States
District Court for the Middle District of North Carolina. See Fox v. City of Greensboro,
807 F. Supp. 2d 476 (2011). In their complaint, Plaintiffs alleged claims for
violation of 42 U.S.C. § 1981 by the City and Johnson
(Counts Two & Three); violation of the Fourth Amendment
by the City, Johnson, Bellamy, Hastings, and Kelly
(Counts Four & Five); and violation of 42 U.S.C. § 1985 by
Johnson, Bellamy, Hastings, Kelly, Slone, Cuthbertson,
and RMA (Counts Six & Seven). Plaintiffs also allege[d] a
variety of state-law claims against various combinations of
Defendants: declaratory judgment regarding
indemnification of litigation expenses (Count One);
malicious prosecution (Counts Eight and Nine); abuse of
process (Counts Ten and Eleven); negligence (Count
Twelve); defamation (Count Thirteen); civil conspiracy
(Counts Fourteen and Fifteen); and punitive damages
(Count Sixteen).
2A criminal defendant is entitled to production of all government evidence favorable to him. See Brady
v. Maryland, 373 U.S. 83, 10 L. Ed. 2d 215 (1963).
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Id. at 483-84. After the federal defendants moved to dismiss, Plaintiffs sought and
were granted leave by the federal court to amend their complaint to “clarify and
amplify the factual basis for their allegations.” Id. at 501. Plaintiffs filed their
amended complaint on 1 April 2011. The federal defendants then moved to dismiss
the amended complaint, including, inter alia, Plaintiffs’ claims “that the City,
Johnson, Bellamy, Hastings, and Kelly took certain actions . . . that led to ‘unfounded’
criminal charges against Plaintiffs (which ultimately terminated in their favor) and
the arrest and detention of Plaintiffs in violation of their Fourth Amendment right to
be free from unreasonable searches and seizures.” Id. at 491. Specifically as to those
Fourth Amendment claims, “Defendants argue[d] that Plaintiffs’ vague allegations
d[id] not sufficiently indicate that each Defendant performed actions proximately
causing Plaintiffs’ indictment and arrest.” Id.
The federal court dismissed with prejudice all of Plaintiffs’ federal law claims,
including the Fourth Amendment claims. Id. at 501. In addition, noting that,
“[u]nder 28 U.S.C. § 1367(c), a federal district court may decline to exercise
supplemental jurisdiction over such state-law claims if the district court has
dismissed all claims over which it has original jurisdiction[,]” the federal court
“decline[d] to exercise supplemental jurisdiction over [Plaintiffs’] state-law claims[,]”
which it dismissed without prejudice. Id. at 500 (citation and internal quotation
marks omitted).
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Opinion of the Court
On 23 January 2012, Plaintiffs filed a complaint (“the state complaint”) in
Forsyth County Superior Court3 against all of the federal defendants except RMA,
and added Defendant Norman O. Rankin, another GPD officer (collectively, “the state
defendants”). The state complaint alleged the following claims: malicious
prosecution, abuse of process, civil conspiracy, and punitive damages against
Johnson, Bellamy, and Hastings; malicious prosecution and abuse of process against
Kelly; civil conspiracy and punitive damages against Cuthbertson, Slone, and
Rankin; and declaratory judgment, malicious prosecution, abuse of process, and
punitive damages against the City. Johnson, Bellamy, Hastings, and Kelly
(“Defendants”) were sued in both their official and individual capacities, while
Cuthbertson, Slone, and Rankin were sued only in their individual capacities.
On 24 February 2012, the individual state defendants moved to dismiss all
claims against them “because [the complaint] fails to sufficiently plead a conspiracy,
abuse of process, and other matters.” See N.C. Gen. Stat. § 1A-1, Rule 12(b)(6) (2013).
The City also moved to dismiss. At the motion hearing, the state defendants argued
that Plaintiffs’ claims were barred by, inter alia, the statute of limitations, the
intracorporate conspiracy doctrine, collateral estoppel, and the failure to plead
sufficient facts. On 11 July 2012, the trial court granted the motion to dismiss as to
the City and dismissed all claims against it with prejudice, a ruling that also
3By consent order entered 12 March 2012, the action was transferred from Forsyth County to Guilford
County.
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Opinion of the Court
effectively eliminated Plaintiffs’ claims against the individual state defendants in
their official capacities. See Moore v. City of Creedmoor, 345 N.C. 356, 367, 481 S.E.2d
14, 21 (1997) (“[O]fficial-capacity suits generally represent only another way of
pleading an action against an entity of which an officer is an agent. Thus, where the
governmental entity may be held liable for damages resulting from its official policy,
a suit naming public officers in their official capacity is redundant.”) (citations and
internal quotation marks omitted). On 14 August 2012, the trial court entered an
order dismissing Plaintiffs’ civil conspiracy and abuse of process claims against the
remaining state defendants in their individual capacities, but “otherwise denied” the
motions to dismiss, leaving intact Plaintiffs’ malicious prosecution claims against
Defendants in their individual capacities.
Defendants appealed from the trial court’s 14 August 2012 order, contending
that the trial court erred by failing to dismiss Plaintiffs’ malicious prosecution claims
pursuant to Rule 12(b)(6). Plaintiffs cross-appealed from the trial court’s dismissal
of their civil conspiracy and abuse of process claims. In an unpublished opinion
entered 17 December 2013, this Court dismissed the appeal and cross-appeal as
interlocutory. Fox v. City of Greensboro, 752 S.E.2d 256 (2013), available at 2013
N.C. App. LEXIS 1321, disc. review denied, 367 N.C. 494, 757 S.E.2d 919 (2014). In
its opinion, this Court noted that
collateral estoppel is an affirmative defense that must be
pled. However, our Supreme Court has held that the
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Opinion of the Court
denial of a motion to dismiss a claim for relief affects a
substantial right when the motion to dismiss makes a
colorable assertion that the claim is barred under the
doctrine of collateral estoppel. Thus, collateral estoppel is
properly before the trial court if that defense is specifically
argued in a motion to dismiss made before a defendant has
answered the plaintiff's complaint. . . .
Where an affirmative defense is raised for the first time in
a motion to dismiss under Rule 12(b)(6), the motion must
ordinarily refer expressly to the affirmative defense relied
upon. However, where the non-movant has not been
surprised and has full opportunity to argue and present
evidence on the affirmative defense, the failure of the
motion to expressly refer to the affirmative defense will not
bar consideration of the defense by the trial court. Once it
is determined that the affirmative defense is properly
before the trial court, dismissal under Rule 12(b)(6) on the
grounds of the affirmative defense is proper if the
complaint on its face reveals an insurmountable bar to
recovery.
Id. at *6-7 (citations, internal quotation marks, and brackets omitted). This Court
then held that Defendants
did not make any colorable claim of collateral estoppel in
their motion to dismiss. In fact, Defendants’ motion is
devoid of any mention of collateral estoppel. There is no
pleading in the record asserting collateral estoppel.
Further, Defendants’ motion does not reference the prior
order of the District Court for the Middle District of North
Carolina upon which they base their argument for
collateral estoppel. Finally, . . . the complaint in the
present case makes no mention of the federal court
judgment.
It is true that Defendants argued collateral estoppel at the
hearing on their motion to dismiss, and that Plaintiffs,
without objection, argued against collateral estoppel at
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Opinion of the Court
that hearing. It also appears that Defendants submitted a
brief in support of their motion to dismiss in which they
argued collateral estoppel. However, that brief does not
appear in the record. Assuming, arguendo, the collateral
estoppel argument was properly before the trial court, we
do not see how the trial court could have granted
Defendants’ motion to dismiss based upon that argument.
Id. at *8-11 (citations and internal quotation marks omitted).
Following dismissal of the prior appeal, Defendants filed a timely answer to
Plaintiffs’ complaint on 14 November 2013, specifically pleading the factual basis for
their collateral estoppel defense and attaching and incorporating by reference the
relevant federal complaint and order upon which that defense is based. On 5 August
2014, Defendants moved for judgment on the pleadings pursuant to Rule 12(c) of our
North Carolina Rules of Civil Procedure:
In support of this motion, [D]efendants contend that
[P]laintiffs’ remaining claim for malicious prosecution is
barred by the doctrine of collateral estoppel given the final
judgment in the prior case Fox v. City of Greensboro, 807 F.
Supp. 2d 476 (M.D.N.C. 2011) (See Answer, First Defense.)
Specifically, the federal court previously dismissed with
prejudice, inter alia, [P]laintiffs’ claim for malicious
prosecution rooted in the Fourth Amendment to the
Federal Constitution because the alleged misconduct of
[D]efendants did not proximately cause them harm. This
federal order and judgment therefore bar[s] [P]laintiffs’
remaining malicious prosecution claims against
[D]efendants because the causation element essential to
that state law claim was previously decided against
[P]laintiffs by virtue of the federal court’s order.
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Opinion of the Court
Following a hearing on 4 September 2014, the trial court denied Defendants’ motion
specifically as to the issue of collateral estoppel by order entered 25 September 2014.
From that order, Defendants appeal.
Grounds for Appellate Review
As Defendants note, this appeal is interlocutory.
Interlocutory orders are those made during the pendency
of an action which do not dispose of the case, but instead
leave it for further action by the trial court in order to settle
and determine the entire controversy. As a general rule,
interlocutory orders are not immediately appealable.
However, immediate appeal of interlocutory orders and
judgments is available . . . when the interlocutory order
affects a substantial right under [N.C. Gen. Stat.] §§ 1-
277(a) and 7A-27(d)(1).
. . . . [The] denial of a motion to dismiss a claim for relief
affects a substantial right when the motion to dismiss
makes a colorable assertion that the claim is barred under
the doctrine of collateral estoppel. . . . Under the collateral
estoppel doctrine, parties and parties in privity with them
. . . are precluded from retrying fully litigated issues that
were decided in any prior determination and were
necessary to the prior determination. The doctrine is
designed to prevent repetitious lawsuits, and parties have
a substantial right to avoid litigating issues that have
already been determined by a final judgment.
Turner v. Hammocks Beach Corp., 363 N.C. 555, 558, 681 S.E.2d 770, 773 (2009)
(citations and internal quotation marks omitted). As noted supra, following dismissal
of their previous appeal, Defendants filed an answer in which they specifically
asserted collateral estoppel as a defense to Plaintiffs’ malicious prosecution claims
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Opinion of the Court
and moved for judgment on the pleadings based upon their collateral estoppel
defense. Defendants having made “a colorable assertion that the claim is barred
under the doctrine of collateral estoppel[,]” the denial of their motion for judgment on
the pleadings affects a substantial right. See id. Accordingly, Defendants’
interlocutory appeal is properly before this Court.
Discussion
Defendants argue that the trial court erred in denying their motion for
judgment on the pleadings as to Plaintiffs’ malicious prosecution claims based on the
doctrine of collateral estoppel. We disagree.
I. Relation of the trial court’s Rule 12(c) and 12(b)(6) orders
As a preliminary matter, we consider Defendants’ assertion that the trial
court’s August 2012 order denying their Rule 12(b)(6) motion did not bar the trial
court from adjudicating Defendants’ motion for judgment on the pleadings pursuant
to Rule 12(c). It is well established that, ordinarily, “no appeal lies from one Superior
Court judge to another; that one Superior Court judge may not correct another's
errors of law; and that ordinarily one judge may not modify, overrule, or change the
judgment of another Superior Court judge previously made in the same action.”
Calloway v. Ford Motor Co., 281 N.C. 496, 501, 189 S.E.2d 484, 488 (1972). The only
exception occurs when three conditions are met: (1) the subsequent order “was
rendered at a different stage of the proceeding, [(2)] the materials considered by [the
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second judge] were not the same, and [(3)] the [first] motion . . . did not present the
same question as that raised by the later motion . . . .” Smithwick v. Crutchfield, 87
N.C. App. 374, 376, 361 S.E.2d 111, 113 (1987) (citation omitted). Defendants argue
that all three of the Smithwick conditions are satisfied here.
First, Defendants point out that a motion pursuant to Rule 12(c) may be made
only after the pleadings are closed, while a Rule 12(b)(6) motion must be made before
the pleadings are closed. See N.C. Gen. Stat. § 1A-1, Rule 12; see also Robertson v.
Boyd, 88 N.C. App. 437, 440, 363 S.E.2d 672, 675 (1988) (noting that “[t]he principal
difference between the two motions is that a motion under Rule 12(c) . . . is properly
made after the pleadings are closed while a motion under Rule 12(b)(6) must be made
prior to or contemporaneously with the filing of the responsive pleading”). Plaintiffs
counter that, because “[b]oth a motion for judgment on the pleadings and a motion to
dismiss for failure to state a claim upon which relief should be granted when a
complaint fails to allege facts sufficient to state a cause of action or pleads facts which
deny the right to any relief[,]” id. (citations omitted), there is no “functional”
difference between the stage of the proceedings when each motion is decided. We
must reject Plaintiffs’ contention:
As we have recognized, a complaint is subject to dismissal
under Rule 12(b)(6) if no law exists to support the claim
made, if sufficient facts to make out a good claim are
absent, or if facts are disclosed which will necessarily
defeat the claim. On the other hand, a motion for judgment
on the pleadings pursuant to Rule 12(c) should only be
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Opinion of the Court
granted when the movant clearly establishes that no
material issue of fact remains to be resolved and that the
movant is entitled to judgment as a matter of law. Neither
rule employs the same standard. It is plainly evident
under our Rules of Civil Procedure that because a plaintiff
has survived a 12(b)(6) motion, and thus has alleged a
claim for which relief may be granted, his survival in the
action is not the equivalent of the court determining that
conflicting issues of fact exist and no party is entitled to
judgment as a matter of law under Rule 12(c).
Cash v. State Farm Mut. Auto. Ins. Co., 137 N.C. App. 192, 201-02, 528 S.E.2d 372,
378 (2000) (citations and internal quotation marks omitted).
Regarding the second and third Smithwick conditions, this Court’s opinion
dismissing Defendants’ previous appeal shows that different materials and questions
were considered by the trial court in ruling on the respective Rule 12(b)(6) and Rule
12(c) motions. In ruling on Defendants’ Rule 12(b)(6) motion, the trial court
considered only Plaintiffs’ complaint and the arguments of the parties, while the later
Rule 12(c) ruling was based upon the trial court’s consideration of additional
materials: Defendants’ answer, the federal complaint, and the federal court’s
decision. Further, as we observed supra, this Court dismissed Defendants’
interlocutory appeal precisely because it was not persuaded by Defendants’ argument
that the trial court’s denial of their Rule 12(b)(6) motion “necessarily rejected their
argument that Plaintiffs’ malicious prosecution claims were barred by collateral
estoppel.” Fox, 2013 N.C. App. LEXIS 1321 *4. In contrast, the trial court’s Rule
12(c) order explicitly ruled on Defendants’ collateral estoppel argument. In sum, the
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Opinion of the Court
Rule 12(c) order appealed from here is not an improper “overruling” by a second
superior court judge of an earlier superior court judge’s Rule 12(b)(6) order.
II. Standard of review
“A motion for judgment on the pleadings [pursuant to Rule 12(c)] should not
be granted unless the movant clearly establishes that no material issue of fact
remains to be resolved and that he is entitled to judgment as a matter of law.” B.
Kelley Enters., Inc. v. Vitacost.com, Inc., 211 N.C. App. 592, 593, 710 S.E.2d 334, 336
(2011) (citation and internal quotation marks omitted).
The trial court is required to view the facts and permissible
inferences in the light most favorable to the nonmoving
party. All well pleaded factual allegations in the
nonmoving party’s pleadings are taken as true and all
contravening assertions in the movant’s pleadings are
taken as false. All allegations in the nonmovant’s
pleadings, except conclusions of law, legally impossible
facts, and matters not admissible in evidence at the trial,
are deemed admitted by the movant for purposes of the
motion.
Ragsdale v. Kennedy, 286 N.C. 130, 137, 209 S.E.2d 494, 499 (1974) (citations
omitted). We review de novo a trial court’s ruling on a motion to dismiss under Rule
12(c). Id. Further, for a Rule 12(c) motion based upon an assertion of collateral
estoppel:
In determining what issues were actually litigated or
determined by the earlier judgment, the court in the second
proceeding is free to go beyond the judgment roll, and may
examine the pleadings and the evidence if any in the prior
action. . . . The burden is on the party asserting issue
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Opinion of the Court
preclusion to show with clarity and certainty what was
determined by the prior judgment.
Burgess v. First Union Nat’l Bank of N.C., 150 N.C. App. 67, 75, 563 S.E.2d 14, 20
(2002) (citation, internal quotation marks, brackets, and emphasis omitted).
III. The trial court’s rejection of Defendants’ collateral estoppel defense
Defendants’ collateral estoppel defense is based on their contention that, in its
2011 opinion dismissing, inter alia, Plaintiffs’ Fourth Amendment claims for failure
to state a claim under Federal Rule 12(b)(6), the federal court ruled against Plaintiffs
on the same issue of proximate cause applicable to their state malicious prosecution
allegations, thereby precluding re-litigation of those claims in Guilford County
Superior Court. Although we agree that both Plaintiffs’ federal Fourth Amendment
claims and their state malicious prosecution claims include the same element of
proximate cause,4 after a careful analysis of the procedural posture of the federal
case, we are not persuaded that the dismissal of the Fourth Amendment claims for
failing to meet the federal “plausibility” pleading standard means “the federal court
has already determined that [P]laintiffs cannot establish the same requisite
causation element essential to their [state malicious prosecution] claim[s].”
“Under the doctrine of collateral estoppel, when an issue has been fully litigated
and decided, it cannot be contested again between the same parties, even if the first
4 “It is well settled that a plaintiff asserting a constitutional tort under § 1983 must, like any tort
plaintiff, satisfy the element of proximate causation.” Fox, 807 F. Supp. 2d at 492 (citation, internal
quotation marks, brackets, and ellipsis omitted).
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adjudication is conducted in federal court and the second in state court.” McCallum
v. N.C. Coop. Extension Serv. of N.C. State Univ., 142 N.C. App. 48, 52, 542 S.E.2d
227, 231 (citation omitted; emphasis added), appeal dismissed and disc. review
denied, 353 N.C. 452, 548 S.E.2d 527 (2001). In addition, “parties are precluded from
retrying fully litigated issues that were decided in any prior determination, even
where the claims asserted are not the same.” Id. at 51, 542 S.E.2d at 231 (citation
omitted). “The elements of collateral estoppel . . . are as follows: (1) a prior suit
resulting in a final judgment on the merits; (2) identical issues involved; (3) the issue
was actually litigated in the prior suit and necessary to the judgment; and (4) the
issue was actually determined.” Bluebird Corp. v. Aubin, 188 N.C. App. 671, 678, 657
S.E.2d 55, 61 (citation and internal quotation marks omitted; emphasis added), disc.
review denied, 362 N.C. 679, 669 S.E.2d 741 (2008). Thus, as an initial step, we must
determine whether the federal court’s dismissal of Plaintiffs’ claims under Federal
Rule 12(b)(6) was a final judgment on the merits that actually decided the issue of
proximate cause.
It is well settled that “[a] dismissal under [North Carolina Rule of Civil
Procedure] Rule 12(b)(6) operates as an adjudication on the merits unless the court
specifies that the dismissal is without prejudice.” Hoots v. Pryor, 106 N.C. App. 397,
404, 417 S.E.2d 269, 274 (citations omitted), disc. review denied, 332 N.C. 345, 421
S.E.2d 148 (1992); see also N.C. Gen. Stat. § 1A-1, Rule 41(b) (2013). However, the
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federal court did not dismiss Plaintiffs’ federal claims under North Carolina Rule
12(b)(6), but rather dismissed them pursuant to Federal Rule 12(b)(6). See Fox, 807
F. Supp. 2d at 484. No North Carolina case law or statute that we have discovered
directly addresses the question of whether a dismissal under Federal Rule 12(b)(6)
operates as an adjudication on the merits so as to collaterally estop a plaintiff from
re-litigating a claim or issue in our State’s courts. Of course, if the evaluation of a
claim in light of a motion to dismiss pursuant to Federal Rule 12(b)(6) were identical
to the evaluation made in response to a motion under North Carolina Rule 12(b)(6),
it would be clear that the federal court’s dismissal had adjudicated and settled the
same issue Plaintiffs raise in their state complaint. However, our review of the
pertinent statutes and case law demonstrates that the standard under Federal Rule
12(b)(6), which the federal court here held Plaintiffs failed to meet, is a different,
higher pleading standard than mandated under our own General Statutes. In other
words, the fact that Plaintiffs’ allegations of proximate cause in the federal complaint
did not meet the pleading standard under Federal Rule 12(b)(6) does not necessarily
mean that their allegations of proximate cause would have resulted in dismissal
pursuant to North Carolina Rule 12(b)(6).
As the federal court noted in its order, “[t]he purpose of a motion under Federal
Rule of Civil Procedure 12(b)(6) 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
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defenses.” Id. (citation and internal quotation marks omitted; emphasis added). In
so doing, the federal court explicitly applied the so-called “plausibility” pleading
standard as enunciated by the United States Supreme Court in Bell Atl. Corp. v.
Twombly:
Under Federal Rule of Civil Procedure 8(a)(2), a complaint
must contain a “short and plain statement of the claim
showing that the pleader is entitled to relief.” Although the
complaint need only “give the defendant fair notice of what
the . . . claim is and the grounds upon which it rests,” Bell
Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S. Ct. 1955,
167 L. Ed. 2d 929 (2007) (quoting Conley v. Gibson, 355
U.S. 41, 47, 78 S. Ct. 99, 2 L. Ed. 2d 80 (1957), abrogated
on other grounds by Twombly, 550 U.S. 544, 127 S. Ct.
1955, 167 L. Ed. 2d 929), a plaintiff’s obligation “requires
more than labels and conclusions, and a formulaic
recitation of the elements of a cause of action will not do,”
id. [Federal] Rule 12(b)(6) protects against meritless
litigation by requiring sufficient factual allegations “to
raise a right to relief above the speculative level” so as to
“nudge[] the[] claims across the line from conceivable to
plausible.” Id. at 555, 570; see Ashcroft v. Iqbal, 556 U.S.
662, 129 S. Ct. 1937, 1949-51, 173 L. Ed. 2d 868 (2009).
Id. at 484. As a prior panel of this Court has previously held, the higher federal
plausibility pleading standard differs from our State’s notice pleading standard:
Plaintiff argues that this [C]ourt should apply the
plausibility standard as set forth in Bell Atlantic Corp. v.
Twombly . . . . Plaintiff has also correctly noted that to
date, North Carolina has not adopted the plausibility
standard set forth in Bell Atlantic for 12(b)(6) Motions to
Dismiss. This Court does not have the authority to adopt
a new standard of review for motions to dismiss. Instead,
we use the following standard, which is the correct
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standard of review as used by the North Carolina appellate
courts:
On a motion to dismiss pursuant to Rule 12(b)(6) of the
North Carolina Rules of Civil Procedure, the standard of
review is whether, as a matter of law, the allegations of the
complaint, treated as true, are sufficient to state a claim
upon which relief may be granted under some legal theory.
The complaint must be liberally construed, and the court
should not dismiss the complaint unless it appears beyond
a doubt that the plaintiff could not prove any set of facts to
support his claim which would entitle him to relief.
Holleman v. Aiken, 193 N.C. App. 484, 490-91, 668 S.E.2d 579, 584-85 (2008)
(citations, internal quotation marks, and brackets omitted).
Given the difference between the federal and State pleading standards, we
must conclude that a federal court’s dismissal of claims pursuant to Federal Rule
12(b)(6) is not an adjudication on the merits for purposes of collaterally estopping a
plaintiff from raising the same or related claims under State law in our State’s courts.
See Hoots, 106 N.C. App. at 404, 417 S.E.2d at 274. In other words, a determination
that Plaintiffs’ allegations regarding proximate cause in their Fourth Amendment
claims did not pass the federal plausibility test does not automatically mean they fail
to meet the notice pleading requirements of our State. We acknowledge that the
federal court’s well-reasoned and highly detailed opinion amply demonstrates that
the allegations in Plaintiffs’ federal complaint regarding proximate cause between
Defendants’ alleged acts and Plaintiffs’ criminal prosecutions were, “to put it
charitably, sparse at best.” Fox, 807 F. Supp. 2d at 495. However, the “issue actually
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FOX V. JOHNSON
Opinion of the Court
litigated in the prior suit . . . and . . . actually determined” by the federal court, see
Bluebird Corp., 188 N.C. App. at 678, 657 S.E.2d at 61 (citation and internal
quotation marks omitted), was whether Plaintiffs’ pleadings met the plausibility
standard applicable to motions to dismiss pursuant to Federal Rule 12(b)(6). The
federal court’s opinion simply did not consider or address the issue of whether
Plaintiffs’ pleadings sufficiently stated a claim to survive a motion to dismiss
pursuant to the notice pleading requirements of North Carolina Rule 12(b)(6).
Accordingly, the trial court properly denied Defendants’ motion to dismiss pursuant
to Rule 12(c) based upon their assertion of collateral estoppel.
We emphasize that our holding here is specific and limited to the sole issue
raised by Defendants in this appeal: whether Plaintiffs are collaterally estopped from
litigating their state malicious prosecution claims in North Carolina courts because
the federal court dismissed their federal “malicious prosecution” claims for failing to
meet the plausibility standard applicable to motions to dismiss pursuant to Federal
Rule 12(b)(6). We express no opinion about whether Plaintiffs’ malicious prosecution
claims were sufficiently pled under North Carolina Rule 12(b)(6). As noted by this
Court in Defendants’ previous appeal, that interlocutory issue is not before us at this
point. See, e.g., Turner, 363 N.C. at 558, 681 S.E.2d at 773.
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FOX V. JOHNSON
Opinion of the Court
In sum, Plaintiffs are not collaterally estopped from bringing their malicious
prosecution claims under state law. Accordingly, the trial court did not err in denying
Defendants’ motion to dismiss on that basis, and its order is
AFFIRMED.
Judges MCCULLOUGH and ZACHARY concur.
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