An unpublished opinion of the North Carolina Court of Appeals does not constitute
controlling legal authority. Citation is disfavored, but may be permitted in accordance
with the provisions of Rule 30(e)(3) of the North Carolina Rules of Appellate Procedure.
NORTH CAROLINA COURT OF APPEALS
6 January 2004
New Hanover County
JAMES M. MASH,
Appeal by defendant from orders entered 15 July 2002 and 14
October 2002 by Judge Ernest B. Fullwood in New Hanover County
Heard in the Court of Appeals 1 December 2003.
Womble Carlyle Sandridge & Rice, P.L.L.C., by Pressly M.
Millen, for plaintiff-appellee.
Fletcher, Ray & Satterfield, L.L.P., by R. Jay Short, Jr., and
Kimberly L. Moore, for defendant-appellant.
Defendant (James Mash) appeals from entry of summary judgment
on his counterclaims, and from the award of costs to plaintiff and
the denial of his motion for costs.
The relevant evidence is summarized as follows: Plaintiff
In 1997, defendant was plaintiff’s president, CEO, and
one of plaintiff’s shareholders.
On 13 August 1997 plaintiff’s
shareholders, including defendant, executed an Amended and Restated
-2Shareholders Agreement (the Shareholders Agreement).
repurchase an employee-shareholder’s shares upon the occurrence of
certain “option events,” including “termination for Cause by the
Paragraph 11 also states that:
Upon the occurrence of any of the Option
Events . . . the Company shall have the option
. . . to purchase .. . the Stockholder Shares
of . . . [the terminated employee] provided
that the Company shall have first given
written notice . . . [to the ex-employee]
within sixty (60) days after the date that the
Company receives notice of the [termination].
On 20 February 1998 plaintiff’s board of directors held a
meeting, attended by defendant.
Members of plaintiff’s board
confronted defendant with their recent discovery of financial
misconduct on defendant’s part, including evidence that defendant
concealed from plaintiff, and (2) failed to reimburse plaintiff for
thousands of dollars in personal expenses that defendant charged to
the company credit card.
Plaintiff informed defendant that he was
Defendant’s personal effects were removed from the
building, and he did not perform any work for plaintiff after 20
Although defendant may have been, in the ordinary sense of the
word, “fired” at the 20 February 1998 board meeting, the meeting
did not resolve the issue of how defendant’s separation would be
structured. At the meeting, the board informed defendant that they
had sufficient grounds to have defendant formally terminated for
However, because plaintiff also wished to avoid negative
opportunity to resign voluntarily, provided he agreed to certain
At defendant’s request, plaintiff sent defendant a
proposed agreement setting out the terms for defendant’s voluntary
resignation from plaintiff.
The proposed agreement provided that
defendant would be allowed to resign voluntarily and would receive
$50,000 in severance pay.
In return, defendant had to sign a
release of all claims against plaintiff, sell his shareholder
stocks to plaintiff, and limit public comment about his separation
from plaintiff to a statement that he “resigned to pursue other
Defendant did not respond to plaintiff’s proposal, which he
received on 10 March 1998 via certified mail, return receipt
On 29 May 1998, plaintiff sent defendant another
letter, also sent via certified mail, return receipt requested, and
received by defendant on 1 June 1998.
This letter stated in
To date we have not received any response from
you to our letter dated March 10, 1998. . . .
terminated for cause. Accordingly, pursuant
to the provisions of Section 11 of the . . .
[Shareholders Agreement], this letter shall
serve as notice to you that the Company has
chosen to exercise its option to purchase . .
. the Company’s common stock held by you. . .
. [P]lease return your stock certificate . . .
and we will mark it cancelled.
Thereafter, plaintiff repurchased defendant’s
shares of stock and “marked its stock ledger and other corporate
-4records to reflect the fact that the shares it had repurchased”
from defendant were cancelled.
Defendant failed to return the
cancelled stock certificate to plaintiff, as requested in the
letter of 29 May 1998.
On 30 May 2001, defendant informed
plaintiff’s CEO that the stock certificate had been destroyed, and
agreed to sign an acknowledgment to that effect.
defendant met with plaintiff’s CEO on 31 May 2001, defendant
refused either to return the stock certificate or to sign a form
Shareholders Agreement and conversion of the stock certificate.
performance of the Shareholders Agreement, “namely to surrender to
PharmaResearch the cancelled certificate or, in the alternative, to
Defendant filed an answer and counterclaims on 21 August 2001.
Defendant asserted various defenses, and also made counterclaims
against plaintiff for: (1) declaratory relief, seeking a judgment
declaring him to be the owner of the cancelled shares of stock; (2)
unfair and deceptive trade practices; (3) breach of contract,
alleging that plaintiff breached the Shareholders Agreement by
wrongfully terminating defendant’s employment without good cause
and failing to notify defendant of plaintiff’s exercise of its
repurchase option within 60 days of defendant’s termination; (4)
-5injunctive relief, seeking to bar plaintiff from acting as owner of
the subject shares of stock; and (5) constructive trust.
Plaintiff filed its answer to defendant’s counterclaims on 23
October 2001. Plaintiff sought dismissal of defendant’s claims for
constructive trust pursuant to N.C.R. Civ. P. 12(b)(6).
motion was granted on 24 January 2002 and, accordingly, these
claims are not before this Court.
Plaintiff also sought dismissal
of defendant’s other counterclaims, asserting, inter alia, that the
claims were barred by the applicable statute of limitations.
On 14 June 2002 defendant filed a motion for summary judgment
on his three remaining counterclaims, based on plaintiff’s alleged
failure to give defendant “written notice of its intention to
exercise its option to purchase” defendant’s shares of stock within
60 days of his termination for cause.
On 17 June 2002 plaintiff
defendant’s claims “are time-barred as indicated on the face of the
On 15 July 2002, the trial court entered an order
granting plaintiff’s motion for summary judgment on defendant’s
counterclaims and denying plaintiff’s motion for summary judgment
on its own claims.
The court also denied defendant’s summary
The trial court’s order does not state the legal
basis for its rulings.
On 22 August 2002, plaintiff voluntarily dismissed its action
against defendant under N.C.R. Civ. P. 41(a). Defendant then filed
a motion, pursuant to N.C. R. Civ. P. 41(d), seeking an award of
-6costs based on plaintiff’s voluntary dismissal.
moved the trial court for an award of costs incurred in its defense
of defendant’s counterclaims.
On 14 October 2002, the trial court
motion. Defendant appeals from the court’s summary judgment order,
defendant’s motion for costs.
Standard of Review
Defendant appeals the trial court’s entry of summary judgment.
Under N.C.R. Civ. P. 56(c), summary judgment is properly granted
when “the pleadings, depositions, answers to interrogatories, and
admissions on file, together with the affidavits, if any, show that
there is no genuine issue as to any material fact and that any
party is entitled to a judgment as a matter of law.”
standard of review on appeal from summary judgment is whether there
is any genuine issue of material fact and whether the moving party
is entitled to a judgment as a matter of law.
evidence presented by the parties must be viewed in the light most
favorable to the non-movant.”
Bruce-Terminix Co. v. Zurich Ins.
Co., 130 N.C. App. 729, 733, 504 S.E.2d 574, 577 (1998) (citation
Defendant presents several arguments on appeal regarding his
counterclaims were barred by the statute of limitations, and find
this dispositive of the issues on appeal.
-7“Ordinarily, the question of whether a cause of action is
barred by the statute of limitations is a mixed question of law and
However, when the bar is properly pleaded and the facts are
admitted or are not in conflict, the question of whether the action
is barred becomes one of law, and summary judgment is appropriate.”
Pembee Mfg. Corp. v. Cape Fear Constr. Co., 313 N.C. 488, 491, 329
S.E.2d 350, 353 (1985) (citing Ports Authority v. Roofing Co., 294
N.C. 73, 240 S.E.2d 345 (1978), and Little v. Rose, 285 N.C. 724,
208 S.E.2d 666 (1974)). Further, when the party moving for summary
judgment pleads the statute of limitations, “the burden is then
placed upon the [non-movant] to offer a forecast of evidence
showing that the action was instituted within the permissible
period after the accrual of the cause of action.”
instant case, we conclude that the facts relevant to whether the
statute of limitations has expired on defendant’s counterclaims are
not in dispute.
Defendant’s counterclaims were based on plaintiff’s alleged
breach of the Shareholders Agreement.
asserted that plaintiff (1) terminated him without cause and (2)
exercised its option to repurchase his shares of stock without
properly notifying him within sixty days of his termination.
N.C.G.S. § 1-52(1) (2003) establishes a three year statute of
limitations for an action brought “[u]pon a contract, obligation or
A cause of action generally accrues and the
statute of limitations begins to run as soon
-8as the right to institute and maintain a suit
arises. G.S. 1-15(a) The statute begins to
run on the date the promise is broken. . . .
[T]he right to institute an action commenced,
. . . when defendant broke her promise or took
action inconsistent with the promise[.]
Penley v. Penley, 314 N.C. 1, 20, 332 S.E.2d 51, 62-63 (1985)
(citing Reidsville v. Burton, 269 N.C. 206, 152 S.E.2d 147 (1967),
and Pickett v. Rigsee, 252 N.C. 200, 113 S.E.2d 323 (1960)).
limitations, this Court must first determine when the breach
occurred which caused the cause of action to accrue.”
Highway Patrol Vol. Pledge Committee, 310 N.C. 445, 448, 312 S.E.2d
421, 424 (1984) (citation omitted).
Defendant argues that the statute of limitations did not begin
to run until the unspecified date on which plaintiff physically
marked its ledgers to reflect that defendant’s shares of stock were
This argument is without merit.
It is settled law
“Where there is a breach of an agreement or
the invasion of an agreement . . . the law
infers some damage. . . . The accrual of the
cause of action must therefore be reckoned
from the time when the first injury was
sustained. . . . When the right of the party
is once violated, even in ever so small a
degree, the injury . . . at once springs into
Matthieu v. Gas Co., 269 N.C. 212, 215, 152 S.E.2d 336, 339 (1967)
(quoting Mast v. Sapp, 140 N.C. 533, 537, 53 S.E. 350, 351 (1906)).
See also Fulp v. Fulp, 264 N.C. 20, 26, 140 S.E.2d 708, 714 (1965)
-9(“the statute of limitations began to run against plaintiff’s claim
. . . [when he issued] a flat repudiation of his agreement and
[gave] notice to plaintiff that he intended to misappropriate the
In the instant case, it is undisputed that on 1 June 1998
defendant received a letter from plaintiff informing defendant
unequivocally (1) that he had been terminated for cause, and (2)
that plaintiff was exercising its option to repurchase all of
defendant’s shares of company stock.
Assuming, arguendo, that
plaintiff’s actions were a breach of the Shareholders Agreement,
defendant’s right to sue for breach of contract arose, at the
latest, upon receipt of this letter. Accordingly, we conclude that
the statute of limitations on defendant’s counterclaims began to
run no later than 1 June 1998, when this letter was received, and
expired on 1 June 2001.
Defendant argues that plaintiff’s claim and his counterclaims
accrued on the same date, and thus that “the only way that
Plaintiff’s statute of limitations can prevail is if Plaintiff[‘s]
. . . action was not timely filed.”
The letter of 29
certificate, and did not thereby give plaintiff a valid cause of
action against defendant. The record evidence indicates that on 31
May 2001 defendant expressly refused to return the certificate or
to sign an acknowledgment that it was destroyed.
Based upon the
evidence in the record, we conclude that plaintiff’s cause of
Shareholders Agreement arose on that date.
Defendant also argues that the filing of his counterclaims
“relates back” to the time of plaintiff’s filing of its original
complaint, and argues that if his counterclaims “would have been
timely when the action was commenced” the statute of limitations is
tolled indefinitely as to any counterclaims.
arguendo, that defendant’s argument is correct, we note that on 20
June 2001, when plaintiff’s action was filed, the statute of
Consequently, we find it unnecessary to address the merits of
For the reasons discussed above, we conclude that defendant’s
counterclaims were barred by the statute of limitations, and that
the trial court did not err by granting summary judgment to
plaintiff on the counterclaims.
This assignment of error is
Defendant also appeals from the trial court’s order awarding
costs to plaintiff, and denying defendant’s motion for costs.
Following the trial court’s entry of summary judgment against
dismissal of its original claim, both parties applied to the court
for award of costs.
Defendant’s motion for costs under Rule 41(d)
Plaintiff’s motion for costs incurred in its defense
against defendant’s counterclaims was granted.
-11We first address the trial court’s granting of plaintiff’s
motion for costs.
Defendant’s brief states that the trial court
Defendant has therefore failed to present any argument or authority
in support of its contention, and does not assert any basis on
which we might conclude the trial court erred.
Issues raised in
defendant’s brief, but not supported by argument or authority, are
N.C.R. App. P. 28(b)(6).
The trial court’s
award of costs to plaintiff is affirmed.
We next turn to defendant’s argument that the trial court
erred by failing to award him costs under N.C.R. Civ. P. R. 41
Rule 41(d) provides in pertinent part that a plaintiff
“who dismisses an action or claim under section (a) of this rule
shall be taxed with the costs of the action unless the action was
brought in forma pauperis.”
Plaintiff’s counsel argued to the
superior court, inter alia, that Rule 41(d) is inapplicable because
plaintiff was precluded from voluntarily dismissing its claim once
defendant filed a counterclaim.
Because we affirm the trial
court’s order on alternative grounds, we have no occasion to
address this argument.
In North Carolina “costs may be taxed solely on the basis of
statutory authority . . . [and] courts have no power to adjudge
costs against anyone on mere equitable or moral grounds.” City of
Charlotte v. McNeely, 281 N.C. 684, 691, 190 S.E.2d 179, 185 (1972)
(internal quotations omitted).
This Court recently addressed the
-12current status of our jurisprudence concerning costs in general,
DOT v. Charlotte Area Manufactured Hous. Inc., ___ N.C. App. ___,
586 S.E.2d 780 (2003), and costs in the Rule 41 context, Cosentino
v. Weeks, ___ N.C. App. ___, 586 S.E.2d 787 (2003).
Rule 41(d) requires an award of costs, upon
motion by a defendant, where a plaintiff takes
a voluntary dismissal[.] . . . [W]here Rule
41(d) applies, . . . the discretion to award
costs, is inapplicable because Rule 41(d)
mandates that costs ‘shall be awarded.’
Cosentino, __ N.C. App. at ___, 586 S.E.2d at 790.
This Court has
held that “[t]he ‘costs’ to be taxed under . . . Rule 41(d) against
a plaintiff who dismisses an action under . . . Rule 41(a), means
the costs recoverable in civil actions as delineated in [N.C.G.S.]
Sealy v. Grine, 115 N.C. App. 343, 347, 444 S.E.2d
632, 635 (1994) (citing McNeely, 281 N.C. at 691, 190 S.E.2d at
Moreover, consistent with the Supreme Court’s holding in
McNeely this Court has held that expenses not listed as costs in
the North Carolina General Statutes will not be accommodated.
Charlotte Manufactured Housing, Inc., ___ N.C. App. at ___, 586
S.E.2d at 786; accord Cosentino, ___ N.C. App. at
___, 586 S.E.2d
In the instant case, plaintiff filed a voluntary dismissal
without prejudice pursuant to Rule 41(a).
Defendant’s motion for
costs pursuant to Rule 41(d) referenced two items which are not
enumerated in G.S. § 7A-305(d).
Based on the principles set forth
Cosentino, the trial court did not err in denying defendant’s
motion to tax these expenses against the plaintiff.
-13The trial court’s orders entering summary judgment, awarding
costs to plaintiff, and denying defendant’s motion for costs are
Chief Judge EAGLES and Judge MARTIN concur.
Report per Rule 30(e).