Plasman v. Decca Furniture (Usa), Inc.

IN THE COURT OF APPEALS OF NORTH CAROLINA
No. COA17-151
Filed: 6 February 2018
Catawba County, No. 12 CVS 2832
CHRISTIAN G. PLASMAN, in his individual capacity and derivatively for the benefit
of, and on behalf of and right of nominal party BOLIER & COMPANY, LLC, Plaintiff,
v.
DECCA FURNITURE (USA), INC.; DECCA CONTRACT FURNITURE, LLC;
RICHARD HERBST; WAI THENG TIN; TSANG C. HUNG; DECCA FURNITURE,
LTD.; DECCA HOSPITALITY FURNISHINGS, LLC; DONGGUAN DECCA
FURNITURE CO. LTD.; DARREN HUDGINS; DECCA HOME, LLC; and ELAN BY
DECCA, LLC, Defendants,
and BOLIER & COMPANY, LLC, Nominal Defendant,
v.
CHRISTIAN J. PLASMAN a/k/a/ BARRETT PLASMAN, Third-Party Defendant.
Appeal by Plaintiff Christian G. Plasman and Third-Party Defendant
Christian J. Plasman from order dated 21 October 2016 by Judge Louis A. Bledsoe,
III, in Superior Court, Catawba County. Heard in the Court of Appeals 21 August
2017.
Nexsen Pruet, PLLC, by David S. Pokela; and Law Offices of Matthew K.
Rogers, PLLC, by Matthew K. Rogers, for Plaintiff-Appellant and Third-Party
Defendant Appellant.
PLASMAN V. DECCA FURNITURE (USA) INC.
Opinion of the Court
McGuireWoods LLP, by Robert A. Muckenfuss and Jodie H. Lawson, for
Defendants-Appellees.
McGEE, Chief Judge.
This matter was filed more than five years ago and has been considered by
both state and federal courts. Multiple appeals have been filed from orders of the
trial court to this Court and our Supreme Court, including appeals that have already
been decided by this Court, Bolier & Co., LLC v. Decca Furniture (USA), Inc., __ N.C.
App. __, 792 S.E.2d 865 (2016) (“Bolier I”), disc. review denied, __ N.C. __, 799 S.E.2d
620 (2017); and Plasman v. Decca Furniture (USA), Inc., __ N.C. App. __, 800 S.E.2d
761 (2017) (“Bolier II”). The following factual and procedural background is taken
from the record before us, and from prior opinions of this Court.
Christian G. Plasman (“Plasman”), “in his individual capacity and derivatively
for the benefit of, on behalf of and right of nominal party” Bolier & Company, LLC
(“Bolier” or the “Company”), initiated the present action (the “Action”) by filing a
complaint in Superior Court, Catawba County, on 22 October 2012. The named
Defendants (“Defendants”) in that initial complaint were Defendant Decca Contract
Furniture, LLC (“Decca China”), Decca Furniture (USA), Inc. (“Decca”), a wholly-
owned subsidiary of Decca China, and Richard Herbst (“Herbst”), the president of
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PLASMAN V. DECCA FURNITURE (USA) INC.
Opinion of the Court
Decca.1 Plasman’s son, Christian J. Plasman, a/k/a Barrett Plasman (“Barrett”)
(together with Plasman, “the Plasmans,” together with Plasman and Bolier,
“Plaintiffs”), is a third-party Defendant, who joins Plasman as an Appellant in this
matter.2
I. Factual and Procedural Background
Bolier is a closely held North Carolina company in the business of selling
furniture. Bolier was originally founded and owned by Plasman. Plasman and Decca
entered into an operating agreement (the “Operating Agreement”) on 31 August 2003,
pursuant to which Plasman conferred a fifty-five percent ownership interest in Bolier
to Decca while retaining a forty-five percent interest for himself. In return, Decca
agreed to supply Bolier with furniture for retail sale. The Operating Agreement also
vested Decca with the authority to make all employment decisions related to Bolier.
Bolier II, __ N.C. App. at __, 800 S.E.2d at 764. According to Plasman, prior to the
execution of the Operating Agreement, Herbst and Tsang represented to him that
while it was necessary for Decca to own a majority ownership interest in Bolier “on
paper,” due to certain rules of the Hong Kong Stock Exchange, Bolier would, in
1 The named Defendants currently include Decca, Decca China, Herbst, Tsang C. Hung
(“Tsang”), the chairman of Decca’s board of directors, Wai Theng Tin (“Tin”), Decca Furniture, LTD
(“Decca Furniture”), Decca Hospitality Furnishings, LLC (“Decca Hospitality”), Dongguan Decca
Furniture Co., LTD, Darren Hudgins (“Hudgins”), and Decca Home, LLC. Bolier is also included as a
“nominal party Defendant.”
2 For this reason, we will be referring to Barrett, along with Plasman and Bolier, when we
refer to “Plaintiffs,” even though Barrett is technically a third-party defendant.
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Opinion of the Court
reality, be operated as a 50/50 partnership between Decca and Plasman. Plasman
and Bolier entered into an employment agreement in November 2003 (the
“Employment Agreement”), which provided, inter alia, that Plasman could be
terminated without cause. Id.
Following execution of the Operating and Employment Agreements, Plasman
served as Bolier’s president and chief executive officer while Barrett worked as
Bolier’s operations manager. According to Decca, despite the significant investments
of Decca and Decca China in Bolier’s operations, Bolier sustained losses in excess of
$2,000,000.00 between 2003 and 2012. As a result, Decca terminated the
employment of Plasman and Barrett on 19 October 2012. Id. The Plasmans,
however, refused to accept their terminations and continued to work out of Bolier’s
office space. During this time, the Plasmans set up a new bank account in Bolier’s
name, and they diverted approximately $600,000.00 in Bolier customer payments to
that account. From these diverted funds, Plasman and Barrett paid themselves,
respectively, approximately $33,170.49 and $17,021.66 in salaries and personal
expenses. Plasman also wrote himself a $12,000.00 check, dated 5 December 2012,
from the new account for “Bolier Legal Fees.” Id. Decca eventually changed the locks
to Bolier’s offices, thereby preventing Plasman and Barrett from entering.
Plaintiffs filed the Action in Catawba County Superior Court on 22 October
2012, alleging claims for dissolution; breach of contract; fraud; constructive fraud;
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Opinion of the Court
misappropriation of corporate opportunities; trademark, trade dress and copyright
infringement; conspiracy to defraud; and unfair trade practices. The Action was
designated as a mandatory complex business case on 24 October 2012, and assigned
to the North Carolina Business Court. Id. Decca removed the Action to the United
States District Court for the Western District of North Carolina on 29 October 2012.
Bolier I, __ N.C. App. at __, 792 S.E.2d at 867. On that same date, Decca filed a
motion for a temporary restraining order and preliminary injunction against the
Plasmans pursuant to Rule 65 of the Federal Rules of Civil Procedure seeking, inter
alia, to prohibit any additional diversion of Bolier funds and to recover the funds that
had already been diverted. Id. Decca moved to dismiss Barrett’s counterclaims on
10 December 2012 and on that same date Defendants Decca, Decca China, and Herbst
filed amended counterclaims, and Decca filed an amended third-party complaint,
which included, inter alia, a request for a temporary restraining order and
preliminary and permanent injunctive relief against the Plasmans. Plaintiffs moved
to “supplement and amend [their] complaint” on 3 January 2013, and attached their
“[P]roposed First Amended Complaint” thereto.
A hearing on Decca’s motion was held before federal district court judge
Richard L. Voorhees (“Judge Voorhees”). Judge Voorhees entered an order (“Judge
Voorhees’ Order”) on 27 February 2013, granting Decca’s motion by entering a
preliminary injunction that barred the Plasmans from taking any further actions on
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Opinion of the Court
Bolier’s behalf, directed the Plasmans to return all diverted funds to Bolier within
five business days, and provide an accounting of those funds to Decca. Id.
Plaintiffs filed a document entitled “Plaintiffs’ and Third Party Defendant’s
Response to Court Order” on 6 March 2013. In this document, they represented that
they had “fully complied to the best of their ability with the Court Order signed on
February 27, 2013.” In addition, they stated that “Plaintiffs[’] response herein is
intended to comply with the spirit of [Judge Voorhees’ Order], and by complying
herein, Plaintiffs are not waiving Plaintiffs’ rights to request reconsideration or
appeal.” Id.
Plaintiffs never made any attempt to appeal Judge Voorhees’ Order to the
United States Court of Appeals for the Fourth Circuit. Nor did they file a motion for
reconsideration of Judge Voorhees’ Order. Id. Plaintiffs filed a “Renewed Motion to
Amend Complaint to Include New Parties, Facts and Claims for Relief” on 6
November 2013, and included therein their “Second Proposed First Amended
Complaint.” Judge Voorhees allowed Plaintiffs motion to amend on 9 January 2014,
and Plaintiffs filed their “First Amended Complaint” on 10 January 2014.
Defendants filed a “Motion to Dismiss the First Amended Complaint” on 24 January
2014, and Plaintiffs filed a “Motion to Remand to Catawba County Superior Court”
on 20 March 2014. Judge Voorhees heard these motions, and entered an order on 19
September 2014, dismissing Plaintiffs’ federal copyright claims and declining to
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Opinion of the Court
exercise supplemental jurisdiction over Plaintiffs’ state law claims. As a result, the
Action was remanded to our Business Court for consideration of “[a]ll remaining
claims and motions[.]” Id.
Upon remand, Plaintiffs filed a “Motion to Amend Complaint” with the
Business Court on 20 January 2015, which included Plaintiffs’ “Draft Proposed
Second Amended Complaint.” Defendants filed a “Motion to Strike Supplemental
Pleadings and Motion to Dismiss Third-Party Defendant [Barrett’s] Counterclaims”
on 23 January 2015. Multiple additional motions were filed by Plaintiffs and
Defendants, including Defendants’ “Motion to Dismiss Petitioners’ First Amended
Complaint,” Defendants’ “Motion to Disqualify Counsel and Motion for Sanctions,”
Defendants’ “Motion to Enforce Order, Motion for Contempt, and Motion for
Sanctions,” and “Plaintiffs’ Motion to Amend Preliminary Injunction, to Dissolve
Portions of the Preliminary Injunction and Award Damages, and Motion for
Sanctions.” The trial court entered an order on 26 May 2015 (the “May 2015 Order”),
granting Plaintiffs’ motion to amend their First Amended Complaint, and deciding
multiple other matters before it.
The Plasmans filed notice of appeal from the May 2015 Order on 25 June 2015,
based upon issues related to the injunction imposed by Judge Voorhees, Bolier II, __
N.C. App. at __, 800 S.E.2d at 765, and on that same day filed their revised Second
Amended Complaint, as allowed by the May 2015 Order. Defendants filed a “Motion
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PLASMAN V. DECCA FURNITURE (USA) INC.
Opinion of the Court
to Dismiss Plaintiffs’ Second Amended Complaint” on 22 September 2015, and the
trial court heard Defendants’ motion on 17 December 2015. The trial court entered
its fifty-eight page order dismissing the Second Amended Complaint with prejudice
on 21 October 2016 (the “October 2016 Order”). Plaintiffs appeal.
II. Analysis
Plaintiffs argue on appeal that the trial court erred by dismissing their claims
pursuant to Rule 8(a)(1) and Rule 12(b)(6) of the North Carolina Rules of Civil
Procedure. We disagree.
A. Standard of Review and Relevant Law
1. Rule 8 and Rule 41(b)
“Rule 41(b) of the Rules of Civil Procedure allows a court to dismiss an action
‘[f]or failure of the plaintiff to prosecute or to comply with these rules or any order of
court[.]’ N.C. Gen. Stat. § 1A–1, Rule 41(b) (2003).” Lincoln v. N.C. Dep’t of Health
& Human Servs. 172 N.C. App. 567, 572–73, 616 S.E.2d 622, 626 (2005). As a general
proposition, “the trial court may dismiss for failure to comply with the Rules of Civil
Procedure if it has first determined the appropriateness of lesser sanctions. ‘[T]he
trial court must make findings and conclusions which indicate that it has considered
. . . less drastic sanctions.’” Wilder v. Wilder, 146 N.C. App. 574, 577, 553 S.E.2d 425,
427 (2001) (citations omitted). “‘If the trial court undertakes this analysis, its
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Opinion of the Court
resulting order will be reversed on appeal only for an abuse of discretion.’” Id.(citation omitted).
Rule 8 of our Rules of Civil Procedure sets forth the “General rules of
pleadings[.]” N.C. Gen. Stat. § 1A-1, Rule 8 (2015). Pursuant to Rule 8(a)(1):
A pleading which sets forth a claim for relief, whether an
original claim, counterclaim, crossclaim, or third-party
claim shall contain [a] short and plain statement of the
claim sufficiently particular to give the court and the
parties notice of the transactions, occurrences, or series of
transactions or occurrences, intended to be proved showing
that the pleader is entitled to relief[.]
N.C.G.S. § 1A-1, Rule 8(a)(1).
Although North Carolina is a notice pleading state, our Supreme Court has
cited with approval scholarly analysis that “under the directive of our Rule 8(a)(1) a
complaint need not be as specific as under the former practice, but it must be ‘to some
degree more specific than the federal complaint.’” Sutton v. Duke, 277 N.C. 94, 100,
176 S.E.2d 161, 164 (1970) (citation omitted).
“Under the notice theory of pleading a complainant must
state a claim sufficient to enable the adverse party to
understand the nature of the claim, to answer, and to
prepare for trial.” Ipock v. Gilmore, 73 N.C. App. 182, 188,
326 S.E.2d 271, 276 (1985) (citation omitted) (citing N.C.
Gen. Stat. § 1A–1, Rule 8(a)(1)[.] “While the concept of
notice pleading is liberal in nature, a complaint must
nonetheless state enough to give the substantive elements
of a legally recognized claim or it may be dismissed under
Rule 12(b)(6).”
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Opinion of the Court
Piro v. McKeever, __ N.C. App. __, __, 782 S.E.2d 367, 370 (2016) (quotation marks
and citations omitted). “Merely asserting a grievance is not enough to comply with
. . . Rule 8(a). The first avenue by which a party may properly address the failure to
state a claim is through Rule 12(b)(6) of the North Carolina Rules of Civil Procedure.”
Westover Products, Inc. v. Gateway Roofing, Inc., 94 N.C. App. 63, 70, 380 S.E.2d 369,
374 (1989) (citation omitted).
Our Supreme Court and this Court have recognized that dismissal with
prejudice for violations of the provisions of Rule 8 may be appropriate separate from
a motion to dismiss pursuant to Rule 12(b)(6) for failure to state a claim. See Harris
v. Maready, 311 N.C. 536, 551, 319 S.E.2d 912, 921–22 (1984); Patterson v. Sweatt,
146 N.C. App. 351, 357–59, 553 S.E.2d 404, 408–10 (2001); Miller v. Ferree, 84 N.C.
App. 135, 136–37, 351 S.E.2d 845, 847 (1987). “Appellate courts should not disturb
the trial court’s exercise of discretion unless the challenged action is ‘manifestly
unsupported by reason.’” Id. at 137, 351 S.E.2d at 847.
2. Rule 12(b)(6)
Our Court has articulated the standard of review for a trial court’s grant of a
motion to dismiss for failure to state a claim as follows:
“On appeal of a 12(b)(6) motion to dismiss for failure to
state a claim, our Court conducts a de novo review[.]” “We
consider ‘whether the allegations of the complaint, if
treated as true, are sufficient to state a claim upon which
relief can be granted under some legal theory.’” “The court
must construe the complaint liberally and should not
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Opinion of the Court
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.”
“Dismissal is proper, however, when one of the following
three conditions is satisfied: (1) the complaint on its face
reveals that no law supports the plaintiff’s claim; (2) the
complaint on its face reveals the absence of facts sufficient
to make a good claim; or (3) the complaint discloses some
fact that necessarily defeats the plaintiff’s claim.”
Hinson v. City of Greensboro, 232 N.C. App. 204, 208, 753 S.E.2d 822, 826 (2014)
(citations omitted).
B. Rule 8
Plaintiffs argue that the trial court erred in dismissing the Second Amended
Complaint for repeated violations of Rule 8. We disagree.
First, Plaintiffs allege that the Second Amended Complaint complied with Rule
8(a)(1) and, therefore, any dismissal on the basis of failure to comply with Rule 8(a)(1)
constituted error. We have undertaken a thorough and laborious review of the
Second Amended Complaint, and agree with the trial court that it “is generally
imprecise, and the peculiarities of this pleading have made this consideration of
Defendants’ Motions exceedingly burdensome.” Generally speaking, Plaintiffs’
claims are vague, misleading, or incorrect with regard to (1) the alleged persons or
entities involved – which Plaintiff is asserting the claim and which Defendants are
alleged to have engaged in any improper conduct; (2) the alleged conduct in support
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Opinion of the Court
of the claim or claims; (3) the legal bases in support of the claim or claims; and (4), in
some instances, which specific claim or claims are being alleged.
None of the issues upon which the trial court based its decision to dismiss the
Second Amended Complaint pursuant to violations of Rule 8 should have come as a
surprise to Plaintiffs. In the May 2015 Order, which resolved numerous motions filed
by both Plaintiffs and Defendants, the trial court considered Defendants’ motion to
dismiss Plaintiffs’ First Amended Complaint, alongside Plaintiffs’ motion to amend
Plaintiffs’ First Amended Complaint. The trial court thoroughly addressed the
deficiencies in Plaintiffs’ First Amended Complaint, and plainly stated that those
deficiencies had not been remedied in Plaintiffs’ Proposed Second Amended
Complaint. Nonetheless, the trial court ruled that it would, in its discretion, allow
Plaintiffs yet another chance to remedy the deficiencies in the First Amended
Complaint by granting Plaintiffs leave to further revise the First Amended Complaint
and/or the Proposed Second Amended Complaint, and granted Plaintiffs the
opportunity to file a corrected Second Amended Complaint. Therefore, the trial court,
relevant to this appeal, denied Defendants’ motion to dismiss Plaintiffs’ First
Amended Complaint. However, the trial court made clear that granting Plaintiffs’
motion to amend their First Amended Complaint would be “without prejudice to
Defendants’ rights to move to dismiss the [S]econd [A]mended [C]omplaint, in whole
or in part, as Defendants may deem appropriate.”
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Opinion of the Court
The following portion of the May 2015 Order demonstrates some of the trial
court’s reasoning and direction to Plaintiffs:
The [trial court] agrees with Defendants that Plaintiffs’
First Amended Complaint and [P]roposed Second
Amended Complaint reveal fatal deficiencies on their face.
....
Plaintiffs current and proposed Complaints also fail to
comply with the requirement under Rule 8 of the North
Carolina Rules of Civil Procedure that a pleading contain
“[a] short and plain statement of the claim sufficiently
particular to give the court and the parties notice of the
transactions, occurrences, or series of transactions or
occurrences, intended to be proved showing that the
pleader is entitled to relief, and [a] demand for judgment
for the relief to which he deems himself entitled.” N.C. R.
Civ. P. 8(a)(1)-(2) (2014). In particular, both Plaintiffs’
First Amended Complaint and [P]roposed Second
Amended Complaint fail to make clear which claims are
brought by [] Plasman and which claims are purportedly
brought by Bolier, and neither specifies against which
Defendant or Defendants the alleged claims are asserted.
Further, the current Complaint and [P]roposed Second
Amended Complaint assert a number of claims for relief in
a confusing, unfocused manner[.]
....
Applying these considerations [addressed above in the 26
May 2015 order] to its review of Plaintiffs’ First Amended
Complaint and to Plaintiffs’ Motion to Amend Complaint,
the [trial court] concludes, in its discretion, that it is
appropriate in these circumstances – where the action is
still in its early stages in this forum, and Plaintiffs have
sought to add parties, claims, and allegations based on
conduct purportedly arising after the filing of the First
Amended Complaint – to provide [] Plasman another
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Opinion of the Court
chance to amend the operative complaint to attempt to
state legally cognizable claims in this action.
In the October 2016 Order dismissing Plaintiffs’ actions, the trial court
discussed Plaintiffs’ failure to cure these defects, despite having been given multiple
opportunities to do so:
3. Plaintiff [] Plasman originally filed this action in October
2012, and Defendants subsequently removed the matter to
the United States District Court for the Western District of
North Carolina[.]
4. Upon remand [from the federal district court], the
parties filed a number of substantive motions, which this
[c]ourt resolved in [the May 2015 Order]. In that [order],
the [c]ourt ruled on Plaintiff’s Motion to Amend Complaint,
[and] Defendants’ Motion to Dismiss Plaintiff’s First
Amended Complaint[.]
5. This [c]ourt concluded in [the May 2015] Order that the
“First Amended Complaint and [P]roposed Second
Amended Complaint reveal[ed] fatal deficiencies on their
face.” The First Amended Complaint also asserted claims
“in a confusing, unfocused manner” by grouping claims
together illogically and failing to make clear whether
claims were brought individually or on Bolier’s behalf and
which Defendants were allegedly liable for which claims.
Nevertheless, the [c]ourt, in the exercise of its discretion
and under the specific circumstances in this case,
determined that it was appropriate “to provide [] Plasman
another chance to amend the operative complaint to
attempt to state legally cognizable claims in this action.”
Therefore, the [c]ourt granted [] Plasman’s Motion to
Amend and denied in part as moot Defendants’ Motion to
Dismiss Plasman’s First Amended Complaint. The [c]ourt
also denied in part as moot Defendants’ Motion to Dismiss
Barrett[’s] Counterclaims.
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Opinion of the Court
6. [] Plasman filed his Second Amended Complaint on June
25, 2015. Barrett [] filed his Supplemented and Amended
Third Party Counterclaims on the same day.[3] In lieu of
filing any answer, Defendants filed the present Motions[.]
....
18. Defendants contend, and the [c]ourt agrees, that the
Second Amended Complaint has failed to fully cure those
defects identified in [the May 2015 Order]. The Second
Amended Complaint still fails to “specify against which
Defendant or Defendants the alleged claims are asserted”
and “asserts a number of claims for relief in a confusing,
unfocused manner.” As an example of the former, Plaintiff
captions his misappropriation of trade secrets claims as
against Decca [], Decca China, Decca Contract, Decca
Hospitality, and Decca Home, but the allegations in
support of that claim for relief fail to identify any
involvement by Decca Contract or Decca Hospitality and
instead focus on conduct by Defendants Tin and
Hudgins.[4] As an example of the latter, the Second
Amended Complaint groups together allegations under the
heading “Seventh and Eight Claims for Relief: Self-Dealing
and Misappropriation of Corporate Opportunities –
3 “The [c]ourt did not technically grant Barrett [] leave to amend. Instead, the [c]ourt
anticipated that Barrett [] would refile any counterclaims at a procedurally appropriate time, if
Defendants elected to file any third-party claims after answering the Second Amended Complaint.
. . . . Nevertheless, Defendants did not challenge the timeliness of Barrett[’s] filing, and the [c]ourt
elects to evaluate Barrett[’s] pleading on the merits.” [Footnote is included in the October 2016 Order].
4 “As a further example, the Second Amended Complaint relies on broad allegations that the
Plaintiff intends to hold most of the Defendants liable for most of the causes of action:”
Herbst, Tin, Hudgins, and Tsang are officers and directors of one or more of Decca
China, Decca [], Decca Contract, Decca Hospitality, Decca Home, Decca Classic, and
Decca China Plant, and do not distinguish between actions taken by or for specific
entities. For most of the allegations herein, each of the foregoing individuals and
purported business entities are jointly and severally liable, and the actions and
omissions of one or more of the named parties is attributable to one or more of the
individuals and business entities because they act as agents and representatives of the
other defendants. [Footnote is included in the October 2016 Order].
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Opinion of the Court
Derivatively for the Benefit of Bolier and Directly on behalf
of Plasman as Minority Member[.]” This convoluted
method of grouping claims is exacerbated by the Second
Amended Complaint’s repeated failure to distinguish
between harm suffered by Bolier and harm suffered by []
Plasman, despite the well-established rule that
“shareholders . . . generally may not bring individual
actions to recover what they consider their share of the
damages suffered by the corporation.”
19. In addition, the Second Amended Complaint has not
fully cured its “fail[ure] to make clear which claims are
brought by [] Plasman and which claims are purportedly
brought by Bolier.” For instance, while Plaintiff has
separately captioned his individual and derivative breach
of fiduciary duty claims, several of the allegations under
each section state that various Defendants breached
“fiduciary duties to Bolier and [] Plasman” without
distinction.
20. As a whole, and despite its length, the Second Amended
Complaint is generally imprecise, and the peculiarities of
this pleading have made this consideration of Defendants’
Motions exceedingly burdensome. The [c]ourt therefore
concludes that the Second Amended Complaint is not
“sufficiently particular to give the court and the parties
notice of the transactions, occurrences, or series of
transactions or occurrences, intended to be proved showing
that the pleader is entitled to relief.” N.C. R. Civ. P. 8(a)(1).
After having already afforded Plaintiff the opportunity to
re-plead his claims and specifically identified the ways in
which Plaintiff’s First Amended Complaint and Proposed
Second Amended Complaint were insufficient, the [c]ourt,
in the exercise of its discretion, concludes that the Second
Amended Complaint’s noncompliance with Rule 8 provides
an alternate basis for dismissal in addition to the grounds
identified under Rule 12(b)(6). [Citations omitted].
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Opinion of the Court
Upon our review of the Second Amended Complaint, we affirm the trial court’s
determination that the Second Amended Complaint continued to violate Rule 8(a)(1).
However, Plaintiffs argue:
Rule 8 prescribes no penalty for violation of its terms, and
dismissal can only occur under N.C. R. Civ. P. 41(b). N.C.
R. Civ. P. 7(b)(1) requires that a motion “shall state with
particularity the grounds therefor[.]” However,
Defendants never moved for dismissal under Rule 41(b) as
required under Rule 7(b)(1), and Appellants never had
notice of same.” Therefore, the trial court erred by
dismissing the [Second Amended Complaint] without
referencing Rule 41(b) and without a motion providing
Appellants with notice they were subject to Rule 41(b)
dismissal.
This Court has recognized in Jones v. Boyce, 60 N.C. App. 585, 299 S.E.2d 298 (1983),
that
Rule 8(a)(2) prescribes no penalty for violation of its
proscription against stating the demand for monetary
relief. Absent application of the Rule 41(b) provision for
dismissal for violation of the rules, litigants could ignore
the proscription with impunity, thereby nullifying the
express legislative purpose for its enactment.
The General Assembly thus must have intended
application of the Rule 41(b) power of dismissal as a
permissible sanction for violation of the Rule 8(a)(2)
proscription.
Id. at 587, 299 S.E.2d at 300. We hold the same analysis applies to Rule 8(a)(1), as it
also “does not identify a particular sanction that may be imposed” upon violation of
its requirements. Patterson, 146 N.C. App. at 357, 553 S.E.2d at 409. Contrary to
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Opinion of the Court
Plaintiffs’ assertion in their brief, Jones does not hold that specific reference to Rule
41(b) is required, only that Rule 41(b) serves as the vehicle for ordering sanctions for
violations of Rule 8. In the present case, Defendants clearly indicated in their motion
to dismiss the Second Amended Complaint that they were seeking dismissal in part
based upon violations of Rule 8. Therefore, Plaintiffs were put on notice that
Defendants were seeking dismissal based on Rule 8 violations through the only
means available – Rule 41(b). See Patterson, 146 N.C. App. 351, 553 S.E.2d 404(affirming dismissal of the plaintiff’s action based upon violations of Rule 8 where the
defendant’s motion to dismiss did not reference Rule 41(b)).5
Finally, Plaintiffs argue that the trial court erred in dismissing the Second
Amended Complaint “by not making findings of fact and conclusions of law which
indicate that it had considered less drastic sanctions.”
Our [C]ourt [has] held that sanctions may not be imposed
mechanically. Rather, the circumstances of each case must
be carefully weighed so that the sanction properly takes
into account the severity of the party’s disobedience. [See]
Daniels v. Montgomery Mut. Ins. Co., 81 N.C. App. 600, 344
S.E.2d 847 (1986) (in determining whether to dismiss a
case for violation of motion in limine, trial court must
determine the effectiveness of alternative sanctions). Once
the trial court undertakes this analysis, its resulting order
will be reversed on appeal only for an abuse of discretion.
5We have reviewed the record in Patterson and take judicial notice of the fact that the relevant
motion to dismiss in part pursuant to Rule 8 includes no mention of Rule 41(b).
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PLASMAN V. DECCA FURNITURE (USA) INC.
Opinion of the Court
Patterson, 146 N.C. App. at 357–58, 553 S.E.2d at 409 (citations omitted). Failure of
the trial court to use the labels “finding of fact” or “conclusion of law” will not prevent
this Court from reviewing the trial court’s order to determine if it has appropriately
considered and ruled upon the necessary issues. See Brinn v. Weyerhaeuser Co., 209
N.C. App. 204, 707 S.E.2d 263 (2011) (“although the Commission did not label specific
sentences as either ‘findings of fact’ or ‘conclusions of law’ within its order, the order
was sufficient to allow us to review the Commission’s reasoning”).
As stated in the October 2016 Order, Plaintiffs were allowed to amend their
complaint twice, including having been given two opportunities to draft their Second
Amended Complaint in accordance with the requirements of Rule 8:
This [c]ourt concluded in [the May 2015] Order that the
“First Amended Complaint and [P]roposed Second
Amended Complaint reveal[ed] fatal deficiencies on their
face.” . . . . Nevertheless, the [c]ourt, in the exercise of its
discretion and under the specific circumstances in this
case, determined that it was appropriate “to provide []
Plasman another chance to amend the operative complaint
to attempt to state legally cognizable claims in this action.”
Therefore, the [c]ourt granted [] Plasman’s Motion to
Amend[.]
Despite being given another opportunity to bring their complaint into compliance
with Rule 8, and having been given specific direction concerning how to correct the
deficiencies in their First Amended Complaint and their Proposed Second Amended
Complaint, the trial court found “that the Second Amended Complaint has failed to
fully cure those defects identified in the[c]ourt’s prior order and opinion.” The trial
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PLASMAN V. DECCA FURNITURE (USA) INC.
Opinion of the Court
court then discussed the specific ways in which the Second Amended Complaint
continued to violate Rule 8, and gave multiple examples from the complaint itself. As
a result:
The [c]ourt therefore conclude[d] that the Second Amended
Complaint [wa]s not “sufficiently particular to give the
court and the parties notice of the transactions,
occurrences, or series of transactions or occurrences,
intended to be proved showing that the pleader is entitled
to relief.” N.C. R. Civ. P. 8(a)(1). After having already
afforded Plaintiff the opportunity to re-plead his claims
and specifically identified the ways in which Plaintiff’s
First Amended Complaint and Proposed Second Amended
Complaint were insufficient, the [c]ourt, in the exercise of
its discretion, concludes that the Second Amended
Complaint’s noncompliance with Rule 8 provides an
alternate basis for dismissal in addition to the grounds
identified under Rule 12(b)(6).
We hold that the trial court’s order contains sufficient findings and
conclusions, though not labeled as such, demonstrating that it had considered lesser
sanctions before deciding to dismiss the Second Amended Complaint for violations of
Rule 8. In fact, the trial court indicates that it had decided not to issue any sanctions
for Plaintiffs’ continuing Rule 8 violations in the May 2015 Order, despite its belief
that it had sufficient grounds to do so. We hold that the trial court took “into account
the severity of [Plaintiffs’] disobedience[,]” and “the effectiveness of alternative
sanctions” before deciding that dismissal of the Second Amended Complaint was
warranted. Patterson, 146 N.C. App. at 357–58, 553 S.E.2d at 409.
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PLASMAN V. DECCA FURNITURE (USA) INC.
Opinion of the Court
Plaintiffs do not specifically argue that the trial court’s dismissal of the Second
Amended Complaint amounted to an abuse of discretion. However, to the extent that
Plaintiffs arguments could be interpreted to include such an argument, we hold that
the trial court did not abuse its discretion in dismissing the Second Amended
Complaint, pursuant to its authority under Rule 41(b), in response to Plaintiffs’
multitudinous and continued violations of Rule 8. We therefore affirm.
C. Rule 12(b)(6)
Although our holding above is sufficient to affirm the trial court’s order
dismissing the Second Amended Complaint, we have decided to review the trial
court’s alternate basis for dismissal. The trial court also ruled that the Second
Amended Complaint should be dismissed for failure to state a claim pursuant to Rule
12(b)(6).
We first hold that Plaintiffs’ failure to state their claims with “sufficient[]
particular[ity] to give the court and the parties notice of the transactions, occurrences,
or series of transactions or occurrences, intended to be proved showing that the
pleader is entitled to relief[,]” N.C.G.S. § 1A-1, Rule 8(a)(1), warrant dismissal
pursuant to Rule 12(b)(6). Piro, __ N.C. App. at __, 782 S.E.2d at 370 (quotation
marks and citations omitted) (in order to conform with the dictates of Rule 8(a)(1), “a
complaint must . . . state enough to give the substantive elements of a legally
recognized claim or it may be dismissed under Rule 12(b)(6)”). In addition, we have
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PLASMAN V. DECCA FURNITURE (USA) INC.
Opinion of the Court
methodically reviewed Plaintiffs’ arguments on appeal, which number in excess of
twenty, and hold that none of Plaintiffs’ challenges to the dismissal of certain claims
in the Second Amended Complaint, pursuant to Rule 12(b)(6), have merit.
We note that the disjointed condition of the Second Amended Complaint
rendered this review exceedingly difficult and time consuming, and has resulted in
unnecessary delay in the resolution of this appeal. For instance, the allegations that
Plaintiffs, on appeal, contend support specific claims are often not directly associated
with those claims in any coherent or organized manner. On appeal, Plaintiffs attempt
to cobble together support for individual claims by directing this Court to allegations
scattered throughout the Second Amended Complaint, even though the context
surrounding many of those allegations make clear that they are inapplicable to the
claims to which Plaintiffs now attempt to apply them. As an obvious example of this
practice, in Plaintiffs’ brief they often cite to allegations that are made after the claim
they are alleged to support. Although each new claim in the Second Amended
Complaint includes the regular boilerplate language that “[t]he allegations alleged in
all above paragraphs are alleged herein and incorporated herein by reference[,]” there
is no such boilerplate purporting to incorporate allegations in “all ‘below’ or
‘subsequent’ paragraphs” of the complaint. Nonetheless, on appeal, Plaintiffs
regularly cite to allegations made following a claim in an attempt to provide support
for that claim that is otherwise lacking. As one additional example of the incoherent
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PLASMAN V. DECCA FURNITURE (USA) INC.
Opinion of the Court
nature of the Second Amended Complaint, the first substantive allegation made in
the Second Amended Complaint in support of Plaintiffs’ derivative claim on behalf of
Bolier for alleged breach of fiduciary duty states: “Decca [] breached fiduciary duties
owed to Plasman by failing to follow [the] Operating Agreement, [and] terminating
Plasman without Member or Manager meeting[.]”
After painstaking review of the Second Amended Complaint, we also affirm
the trial court’s dismissal of the Second Amended Complaint pursuant to Rule
12(b)(6) because, for each of Plaintiffs’ claims, one or more of the following is true: “(1)
the complaint on its face reveals that no law supports [P]laintiff[s’] claim; (2) the
complaint on its face reveals the absence of facts sufficient to make a good claim; or
(3) the complaint discloses some fact that necessarily defeats [P]laintiff[s’] claim.”
Hinson, 232 N.C. App. at 208, 753 S.E.2d at 826 (citation omitted).
AFFIRMED.
Judges DIETZ and BERGER concur.
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