Bb&t Boli Plan Tr. v. Mass. Mut. Life Ins. Co.

BB&T BOLI Plan Tr. v. Mass. Mut. Life Ins. Co., 2016 NCBC 34.

STATE OF NORTH CAROLINA IN THE GENERAL COURT OF JUSTICE

SUPERIOR COURT DIVISION

FORSYTH COUNTY 09 CVS 4007

BB&T BOLI PLAN TRUST,

Plaintiff,

v.

ORDER AND OPINION ON

MASSACHUSETTS MUTUAL LIFE DEFENDANT’S MOTION FOR

INSURANCE COMPANY, DETERMINATION OF EFFECT OF

VOLUNTARY DISMISSAL AND

Defendant. DEFENDANT’S MOTION TO DISMISS

BB&T BOLI PLAN TRUST, by and through 15 CVS 2638

its Trustee,

Plaintiff,

v.

MASSACHUSETTS MUTUAL LIFE

INSURANCE COMPANY,

Defendant.

{1} THIS MATTER is before the Court upon Defendant Massachusetts Mutual

Life Insurance Company’s (“Defendant” or “MassMutual”) Motion for Determination

of Effect of Voluntary Dismissal and For Attorneys’ Fees (“Motion to Set Aside

Dismissal”) in BB&T BOLI Plan Trust v. Massachusetts Mutual Life Insurance

Company, No. 09 CVS 4007 (Forsyth County) (“BB&T I”) and Defendant’s Motion to

Dismiss the Complaint (“Motion to Dismiss”) (collectively, the “Motions”) in BB&T

BOLI Plan Trust v. Massachusetts Mutual Life Insurance Company, 15 CVS 2638

(Forsyth County) (“BB&T II”).

{2} After considering the parties’ briefs in support of and in opposition to the

Motions, the appropriate evidence of record, and arguments of counsel at the

hearing held on the Motions, the Court hereby DENIES the Motion to Set Aside

Voluntary Dismissal and DENIES the Motion to Dismiss.

Alston & Bird LLP, by Frank A. Hirsch Jr., Matthew P. McGuire,

Heather Adams, and Ryan P. Ethridge, for Plaintiff BB&T BOLI Plan

Trust.

Skadden, Arps, Slate, Meagher & Flom LLP, by James R. Carroll,

Christopher Lisy, and David S. Clancy, and Stevens & Lee, P.C., by E.

Thomas Henefer and Julie E. Ravis, and Ellis & Winters LLP, by

Matthew W. Sawchak and Jonathan A. Berkelhammer, for Defendant

Massachusetts Mutual Life Insurance Company.

Bledsoe, Judge.

I.

PROCEDURAL AND FACTUAL BACKGROUND

{3} This matter arises out of protracted litigation between Plaintiff BB&T

BOLI Plan Trust (“Plaintiff” or “BB&T Trust”) and Defendant MassMutual over

Defendant’s sale and management of a bank-owned life insurance policy (“BOLI

Policy”), which Plaintiff purchased to insure the lives of key employees of BB&T

Corporation (“BB&T”), the Plaintiff’s grantor.

A. The BOLI Policy

{4} BB&T Trust purchased the BOLI Policy from MassMutual in August 2006

for over $112 million.1 (BB&T II Compl. ¶ 2.) BOLI policies are regulated by

federal tax laws, and while a policy owner may select the accounts into which the

premiums are allocated, the policy owner cannot actively manage those assets once

allocated. (BB&T II Compl. ¶ 21.) Rather, the insurer of a BOLI policy is the legal

owner of the assets and manages the assets for the benefit of the BOLI purchaser.

(BB&T II Compl. ¶ 22.)

{5} Shortly after purchasing the BOLI Policy, BB&T Trust allocated the

premiums almost equally between two funds: a BlackRock-managed fund and a

Citigroup-managed fund called Falcon (the “Falcon Fund”). (BB&T II Compl. ¶ 3.)

The Falcon Fund was a non-traditional hedge fund that offered a potentially higher

yield with correspondingly higher risk. (BB&T II Compl. ¶ 4.)

1 For the purposes of laying out the factual background, the Court cites the allegations in the BB&T

II Complaint. Because the differences in the factual allegations are relevant to the Motion to

Dismiss, the Court will specifically note when it relies on a fact in BB&T II that was not alleged or in

the record in BB&T I.

{6} Prior to BB&T Trust’s purchase of the BOLI Policy, MassMutual provided

BB&T Trust with a Private Placement Memorandum (“PPM”) that set out the terms

of the BOLI Policy. (BB&T II Compl. ¶ 38.) The PPM also included a “stable value

option,” a policy feature by which BB&T Trust could elect to pay additional fees to

MassMutual in exchange for increased protection of its premiums. (BB&T II

Compl. ¶¶ 42–43.)

{7} A stable value agreement is an agreement between the policy insurer and

a third-party stable value provider, usually a major financial services institution.

(BB&T II Compl. ¶ 28.) The stable value provider essentially agrees to protect the

value of the assets from decreases in market value up to a certain amount, allowing

the policy owner to carry the cash value of the BOLI account on its books at par

without adjusting for decreases in the market value of the assets, so long as the

spread between par value and market value does not exceed the limit set forth in

the stable value agreement. (BB&T II Compl. ¶ 29.) BB&T Trust elected to

purchase the stable value option, with Bank of America serving as the stable value

provider. (BB&T II Compl. ¶¶ 42–43.)

{8} BB&T Trust alleges that the full terms of its agreement with MassMutual,

particularly regarding the terms of the stable value agreement (“Stable Value

Agreement”), were set forth in a number of documents. The differences in these

documents across BB&T I and BB&T II is a point of contention in the Motion to

Dismiss.

{9} In BB&T I, BB&T Trust specifically alleged that the parties’ contract

consisted of: (i) the PPM, which included a summary of the stable value agreement

between MassMutual and Bank of America (“SVA Summary”), (BB&T I Am. Compl.

¶¶ 38, 123); (ii) the BOLI Policy, including the Stable Value Endorsement (“SVA

Endorsement”) attached as an addendum thereto (BB&T I Am. Compl. ¶¶ 41, 44,

123); (iii) an August 16, 2006 letter agreement (“Letter Agreement”) by which

MassMutual acknowledged the issuance of the BOLI Policy with the Stable Value

Agreement (BB&T I Am. Compl. ¶¶ 45, 123); and (iv) “certain other

representations, understandings and agreements between the parties,” (BB&T I

Am. Compl. ¶ 123.)2

{10} In BB&T II,3 BB&T Trust additionally alleged that the parties’ contract

included a Negotiated SVA Term Sheet, dated August 11, 2006, by which

MassMutual and BB&T Trust allegedly negotiated the substantive terms of the

Stable Value Agreement that would apply to the BOLI Policy. (BB&T II Compl. ¶¶

48, 138.) BB&T Trust also alleged for the first time that MassMutual and Bank of

America revised the SVA Summary on September 8, 2006, after the purchase of the

BOLI Policy.4 (BB&T II Compl. ¶ 147.)

{11} BB&T Trust alleges that under the terms of the parties’ contract, including

the Stable Value Agreement, certain downward changes in the value of the Falcon

Fund investment would qualify as “Reallocation Events” under which MassMutual

was required to notify BB&T Trust and transfer the premiums out of the Falcon

Fund into more stable assets. In BB&T I, BB&T Trust alleged that the SVA

Summary defined the Reallocation Events. (BB&T I Am. Compl. ¶¶ 47–48.) In

BB&T II, BB&T Trust alleges that the Negotiated SVA Term Sheet defined further

Reallocation Events. (BB&T II Compl. ¶¶ 58, 61–63.) BB&T Trust alleges that

certain Reallocation Events occurred in the fall of 2007, during which time

2 In BB&T I, BB&T Trust alleged claims against MassMutual for alleged breach of fiduciary duty,

aiding and abetting breach of fiduciary duty, negligence, negligent misrepresentation, breach of

contract, fraud, and unfair and deceptive trade practices under N.C. Gen. Stat. § 75-1.1. (BB&T I

First Am. Compl. ¶¶ 94–142). On January 26, 2010, this Court (Diaz, J.) granted MassMutual’s

Motion to Dismiss and dismissed BB&T Trust’s claims for breach of fiduciary duty, aiding and

abetting breach of fiduciary duty, negligence, and unfair and deceptive trade practices, and allowed

BB&T Trust’s claims for breach of contract, fraud, and negligent misrepresentation to proceed.

Order, BB&T I (N.C. Super. Ct. Jan. 26, 2010). On December 4, 2014, BB&T Trust dismissed its

fraud claim without prejudice. At the time of BB&T Trust’s Voluntary Dismissal in May 2015, the

only claims remaining for trial were breach of contract and negligent misrepresentation.

3 In BB&T II, BB&T Trust alleges claims for negligent misrepresentation, breach of contract, and

fraud.

4 In theBB&T II Complaint, BB&T Trust abandons the “SVA Summary” name and instead refers to

that document as the SVA Term Sheet or the Post-Closing Term Sheet. All of those terms refer to

the same document, which was attached as Appendix B to the PPM. (BB&T I Am. Compl. ¶ 38;

BB&T II Compl. ¶ 147.)

MassMutual failed to act to protect the Falcon Fund premiums as agreed, resulting

in significant losses to BB&T Trust.

B. The Litigation

{12} BB&T Trust voluntarily dismissed its claims in BB&T I under N.C. R. Civ.

P. 41(a)(1) on May 1, 2015 (the “Voluntary Dismissal”), twenty-five days before a

scheduled jury trial in the matter was to begin. It filed the BB&T II complaint the

same day. BB&T Trust apparently refiled its case in order to plead theories of

liability that it was barred from presenting in BB&T I.

{13} On April 15, 2011, BB&T Trust moved for leave to file a second amended

complaint. The Court (Murphy, J.) denied BB&T Trust’s motion on the grounds of

undue delay and undue prejudice, because some of the proposed theories of liability

were not explored in the discovery period, which had already closed. Order on

Motion to Amend at ¶¶ 12–13, BB&T I (N.C. Super. Ct. Jan. 27, 2012). The Court

also stated that some of the proposed allegations “smell[ed] of futility and bad faith”

for being inconsistent with deposition testimony of Plaintiff’s designated

representative. Id.

{14} The Court later denied MassMutual’s summary judgment motion, Order

on Motion for Summary Judgment, BB&T I (N.C. Super. Ct. Aug. 15, 2013)

(Murphy, J.), and the parties began to prepare for trial. In response to concerns

raised in pretrial discussions with BB&T Trust, MassMutual moved the Court in

limine for an order precluding BB&T Trust from presenting evidence, argument,

and testimony relating to the theories of liability that it unsuccessfully sought to

plead in its proposed second amended complaint. The Court granted MassMutual’s

motion in limine, affirming Judge Murphy’s Order on the Motion to Amend and

barring BB&T Trust from presenting evidence that supported those rejected

theories. Order on Defendants’ Motion in Limine No. 1 ¶ 20, BB&T I (N.C. Super.

Ct. Apr. 14, 2015).

{15} Two weeks after the Court’s ruling on Defendants’ Motion in Limine No. 1,

BB&T Trust voluntarily dismissed its claims in BB&T I and filed a complaint in

BB&T II. Shortly thereafter, MassMutual filed the Motion to Set Aside Dismissal

in BB&T I and then the Motion to Dismiss in BB&T II. The Motions have been

fully briefed and argued. At the Court’s invitation, counsel submitted

supplementary briefs, which the Court has considered. The Motions are now ripe

for resolution.

II.

ANALYSIS

A. MassMutual’s Motion to Set Aside Dismissal in BB&T I

{16} Defendant’s Motion to Set Aside Dismissal requests that the Court deem

ineffective and set aside the Voluntary Dismissal. MassMutual argues, and BB&T

Trust disputes, that a trial court retains jurisdiction to set aside a Rule 41(a)(1)

voluntary dismissal in the limited circumstance where a plaintiff takes a dismissal

in bad faith. Brisson v. Santoriello, 351 N.C. 589, 597, 528 S.E.2d 569, 573 (2000).

Separate from that argument, MassMutual seeks its attorney’s fees related to the

Motion to Set Aside Dismissal, because a voluntary dismissal under Rule 41 “does

not deprive the court of jurisdiction to consider collateral issues such as sanctions

that require consideration after the action has been terminated.” Bryson v.

Sullivan, 330 N.C. 644, 653, 412 S.E.2d 327, 331 (1992).

{17} N.C. R. Civ. P. 41(a)(1) governs the voluntary dismissal of claims:

Subject to the provisions of Rule 23(c) and of any statute of this State,

an action or claim therein may be dismissed by the plaintiff without

order of court (i) by filing a notice of dismissal at any time before the

plaintiff rests his case, or; (ii) by filing a stipulation of dismissal signed

by all parties who have appeared in the action. . . . If an action

commenced within the time prescribed therefor, or any claim therein,

is dismissed without prejudice under this subsection, a new action

based on the same claim may be commenced within one year after such

dismissal . . . .

This final sentence is known as Rule 41(a)’s “savings provision,” because it allows a

plaintiff to refile an action within one year of a voluntary dismissal, even though

the underlying limitations period may have expired in the interim. See Ga.-Pac.

Corp. v. Bondurant, 81 N.C. App. 362, 365, 344 S.E.2d 302, 304 (1986). The savings

provision is a distinct feature of North Carolina’s Rule 41, which is not present in

its federal counterpart. Compare N.C. R. Civ. P. 41(a)(1) with Fed. R. Civ. P.

41(a)(1).

{18} In general, Rule 41(a) gives a plaintiff broad power over its case.

The Rule 41(a) voluntary dismissal “has salvaged more lawsuits than

any other procedural device, giving the plaintiff a second chance to

present a viable case at trial.” 2 G. Gray Wilson, North Carolina Civil

Procedure § 41-1, at 32 (2d ed. 1995). Many plaintiffs have used “this

rule to cure an unforeseen defect in a claim that did not become

apparent until trial . . . . The rule also offers a safety net to plaintiff or

his counsel who are either unprepared or unwilling to proceed with

trial the first time the case is called.” 2 G. Gray Wilson, North

Carolina Civil Procedure § 41-1, at 33. The purpose of our long-

standing rule allowing a plaintiff to take a voluntary dismissal and

refile the claim within one year even though the statue of limitations

has run subsequent to a plaintiff’s filing of the original complaint is to

provide a one-time opportunity where the plaintiff, for whatever

reason, does not want to continue the suit. The range of reasons

clearly includes those circumstances in which the plaintiff fears

dismissal of the case for rule violations, shortcomings in the pleadings,

evidentiary failures, or any other of the myriad reasons for which the

cause of action might fail. The only limitations are that the dismissal

not be done in bad faith and that it be done prior to a trial court’s

ruling dismissing plaintiff’s claim or otherwise ruling against plaintiff

at any time prior to plaintiff resting his or her case at trial.

Brisson, 351 N.C. at 597, 528 S.E.2d at 572–73. MassMutual argues that the two

exceptions identified in Brisson—that voluntary dismissals cannot be taken in bad

faith and cannot be taken to avoid a court ruling—affect BB&T Trust’s right to

voluntarily dismiss its claims in BB&T I. (Def.’s Mem. Supp. Mot. Determination of

Effect of Vol. Dismiss. 7.) BB&T Trust, on the other hand, argues that the proper

place to challenge the Voluntary Dismissal is in BB&T II. In other words, BB&T

Trust argues that the Brisson exceptions, if present, would bar the application of

the savings provision, but would not authorize the Court to set aside the Voluntary

Dismissal in BB&T I.

{19} The general rule is that once a plaintiff takes a Rule 41(a)(1) dismissal,

“there is nothing the defendant can do to fan the ashes of that action into life[,] and

the court has no role to play.” Brisson, 351 N.C. at 593, 528 S.E.2d at 570. The

plain language of Rule 41(a)(1) supports a plaintiff’s broad authority to unilaterally

dismiss its claims. Roberts v. Young, 120 N.C. App. 720, 726, 464 S.E.2d 78, 83

(1995). Our appellate case law upholds this interpretation. Generally, “no order or

other approval of the court is necessary” to effect a voluntary dismissal once a

plaintiff gives notice under Rule 41(a)(1). Lowe v. Bryant, 55 N.C. App. 608, 610,

286 S.E.2d 652, 653 (1982). See also In re Foreclosure by Rogers Townsend &

Thomas, PC, 773 S.E.2d 101, 103 (N.C. Ct. App. June 2, 2015) (stating that the trial

court’s orders entered after voluntary dismissal were “without legal effect”); Carter

v. Clowers, 102 N.C. App. 247, 250–51, 401 S.E.2d 662, 664 (1991) (“[A] Rule

41(a)(1) notice of dismissal is an action taken by the plaintiff ending the suit, and no

action of the court is necessary to give the notice its full effect.”); Ward v. Taylor, 68

N.C. App. 74, 78, 314 S.E.2d 814, 819 (1984) (Rule 41(a)(1) “does not require court

action, other than ministerial record-keeping functions, to effect a dismissal”).

{20} Nevertheless, there are some well-established exceptions to the general

rule, and these exceptions limit a plaintiff’s ability to terminate an initial action

through a Rule 41(a)(1) voluntary dismissal. The rule itself subjects a plaintiff’s

ability to take a voluntary dismissal to Rule 23(c), which addresses the dismissal of

class actions, and any other statutory exception.5 N.C. R. Civ. P. 41(a)(1).

Furthermore, once a defendant asserts a claim for affirmative relief arising out of

the same transactions alleged by the plaintiff, the plaintiff cannot take a voluntary

dismissal without the defendant’s consent. McCarley v. McCarley, 289 N.C. 109,

111–12, 221 S.E.2d 490, 492 (1976). Even in instances where a plaintiff does

voluntarily dismiss its claims, the trial court retains jurisdiction to consider

collateral issues, including requests for attorney’s fees under N.C. R. Civ. P. 11 and

N.C. Gen. Stat. § 6-21.5. Bryson, 330 N.C. at 653, 412 S.E.2d at 331. All of these

5 Following the spirit of Rule 23(c), the Court of Appeals has likewise held that a plaintiff must

obtain court approval before taking a voluntary dismissal of a pre-certification class action

complaint. See generally Bennett v. Commer. Coll. of Asheboro, Inc., 2016 NCBC LEXIS 24 (N.C.

Super. Ct. Mar. 22, 2016).

scenarios impact a plaintiff’s right to take a voluntary dismissal of its initial action,

but no court has clearly stated whether the Brisson exceptions operate similarly.

{21} The Court concludes that the first Brisson exception does not limit BB&T

Trust’s statutory right to take a voluntary dismissal. If that exception is met, it

would operate to render the Voluntary Dismissal a dismissal with (rather than

without) prejudice. This conclusion is consistent with the general rule that a

voluntary dismissal is effective upon filing, and it acknowledges the realities of the

procedural posture following a voluntary dismissal. In Troy v. Tucker, the plaintiff

took a voluntary dismissal, and the defendant subsequently filed a Rule 60(b)

motion seeking relief from the voluntary dismissal, which the trial court denied.

126 N.C. App. 213, 484 S.E.2d 98 (1997). The Court of Appeals concluded that the

appeal of the Rule 60(b) denial was interlocutory because the voluntary dismissal

“resulted in there being no action pending.” Troy, 126 N.C. App. at 215, 484 S.E.2d

at 99. The Court of Appeals concluded that the defendants were not aggrieved at

the trial court level and would only be aggrieved “when the plaintiff files a new

action.” Id. at 215–16, 484 S.E.2d at 99. MassMutual, likewise, is only aggrieved

by the filing of BB&T II. The Court suspects that had BB&T Trust not refiled their

case, MassMutual would not be seeking to set aside the Voluntary Dismissal and

proceed to a costly and lengthy trial. Furthermore, allowing Brisson’s bad faith

exception to subject all voluntary dismissals to judicial scrutiny would undermine

the intent of Rule 41(a) by creating unnecessary barriers for plaintiffs who wish to

abandon their claims.

{22} The Court concludes that the second Brisson exception, on the other hand,

may limit a plaintiff’s ability to take a voluntary dismissal in the initial action. As

discussed below, the second Brisson exception is essentially a restatement of Rule

41(a)(1) itself, which does not allow a plaintiff to take a voluntary dismissal after

resting his case. See Roberts, 120 N.C. App. at 726, 464 S.E.2d at 83. This

temporal restriction “limit[s] the time within which a plaintiff has the absolute

right to dismiss his action . . . .” Whitehurst v. Va. Dare Transp. Co., 19 N.C. App.

352, 355, 198 S.E.2d 741, 743 (1973). When a plaintiff attempts to take a voluntary

dismissal after resting its case, the trial court may appropriately set aside the

voluntary dismissal and deem it a nullity. See, e.g., Troy, 126 N.C. App. at 216–17,

484 S.E.2d at 100 (noting that trial court could have stricken a voluntary dismissal

and proceeded to rule on the pending summary judgment motion where plaintiff

attempted to take a dismissal after resting his case); Maurice v. Hatterasman Motel

Corp., 38 N.C. App. 588, 591–92, 248 S.E.2d 430, 432–33 (1978) (voiding and

vacating a voluntary dismissal taken after the plaintiff rested his case). Therefore,

if the Court concludes that the second Brisson exception is met, the Court may

grant the requested relief and set aside the Voluntary Dismissal in BB&T I.

{23} Because MassMutual seeks dismissal in both BB&T I and BB&T II, the

Court will consider the merits of MassMutual’s arguments as to each of the Brisson

exceptions. Consistent with the discussion above, the Court considers the first

exception as if raised in BB&T II, and the second exception as it was actually raised

in BB&T I.

{24} The bad faith exception to Rule 41(a)(1) is a narrow one; Brisson itself

states that a Rule 41(a) dismissal may be taken for a myriad of reasons, even, for

instance, that the plaintiff or his counsel is “unwilling” to proceed with trial.

Brisson, 351 N.C. at 597, 528 S.E.2d at 572–73. Our courts have consistently

applied the bad faith exception to Rule 41(a) in only one scenario, where the initial

complaint fails to conform with the rules of pleading and merely seeks to take

advantage of the savings provision. In laying out the bad-faith exception, the

Brisson court primarily relied on Estrada v. Burnham, in which the North Carolina

Supreme Court held that a plaintiff had not filed its pleadings in good faith where

she filed a bare-bones complaint and took a voluntary dismissal just two minutes

later for the admitted purpose of obtaining the one-year extension of the savings

provision. 316 N.C 318, 319, 341 S.E.2d 538, 539–40 (1986). After the plaintiff

refiled the action, the trial court granted a motion to dismiss the refiled complaint

as time barred, and the Supreme Court affirmed, holding that the initial complaint

violated the good-faith filing requirement of N.C. R. Civ. P. 11(a) because the

plaintiff had no intent to prosecute the litigation. Id. at 323, 341 S.E.2d at 542. The

Court concluded, reading the Rules of Civil Procedure as a whole, that “in order for

a timely filed complaint to toll the statute of limitations and provide the basis for a

one-year ‘extension’ by way of a Rule 41(a)(1) voluntary dismissal without prejudice,

the complaint must conform in all respects to the rules of pleading, including Rule

11(a).” Id.

{25} Relying on Estrada, the Court of Appeals has also applied the bad faith

exception to Rule 41(a) where the plaintiff willfully and intentionally violated Rule

11(a) and Rule 4 in litigating its initial complaint. Stocum v. Oakley, 185 N.C. App.

56, 65, 648 S.E.2d 227, 235 (2007) (holding that the plaintiff could not take

advantage of the savings provision following a voluntary dismissal where plaintiff

did not attempt service of the initial complaint for two years and represented to the

court that discovery was ongoing). Most recently, our Court of Appeals has clarified

that Estrada and those cases following it require an initial complaint to “conform in

all respects to the rules of pleading contained in Rules 8, 9, 10, and 11 of the North

Carolina Rules of Civil Procedure,” which govern the form and content of pleadings,

in order to benefit from the one year savings provision of Rule 41(a). Murphy v.

Hinton, 773 S.E.2d 355, 359 (N.C. Ct. App. July 7, 2015) (holding that a plaintiff

was not entitled to the savings provision’s one year extension where the initial

complaint lacked any allegations of negligence and therefore failed to satisfy Rule

8(a)(1)).

{26} The rationale behind this bad faith exception is that where an initial

complaint does not conform with the rules of pleading, a plaintiff should not be

entitled to the “safety net” of Rule 41(a)’s savings provision after dismissal. See

Estrada, 316 N.C at 323, 341 S.E.2d at 542. Here, MassMutual does not allege that

the complaint in BB&T I did not conform to the rules of pleading. Acknowledging

that the present situation is not factually identical to precedent, MassMutual

argues that whether a voluntary dismissal is taken in bad faith “must be

determined on an individualized basis.” Eubank v. Van-Riel, No. COA11-1088,

2012 N.C. App. LEXIS 727, at *32 n.3 (June 19, 2012) (unpublished). MassMutual

argues that BB&T Trust took the Voluntary Dismissal in bad faith by waiting three

years after the Court’s order denying its motion to amend. (Def.’s Mem. Supp. Mot.

Determination of Effect of Vol. Dismiss. 10.) The Court declines, however, to extend

the bad faith exception so far beyond precedent. Unlike the parties in Estrada,

Stocum, and Murphy, BB&T Trust has complied with the general rules of pleading

and actively pursued its claims. The Court therefore concludes that BB&T Trust

did not take the Voluntary Dismissal in bad faith; to hold otherwise would defeat

Rule 41(a)’s broad function as a “safety net.”

{27} As for the second exception identified in Brisson, that a voluntary

dismissal cannot be used to avoid a court’s adverse ruling, that exception has only

been applied in cases where the plaintiff sought to avoid a pending dispositive

ruling. For instance, the Court of Appeals has held that a plaintiff was not entitled

to take a voluntary dismissal after the trial court had already signed an order

granting summary judgment for the defendant but not yet filed the order with the

clerk. Maurice, 38 N.C. App. at 591–92, 248 S.E.2d at 432–33 (1978). This

exception is, in essence, an extension of Rule 41(a)(1) itself:

Where a party appears at a summary judgment hearing and produces

evidence or is given an opportunity to produce evidence and fails to do

so, and the question is submitted to the court for decision, he has

“rested his case” within the meaning of Rule 41(a)(1)(i) of the North

Carolina Rules of Civil Procedure. He cannot thereafter take a

voluntary dismissal under Rule 41(a)(1)(i). To rule otherwise would

make a mockery of summary judgment proceedings.

Id. See also Troy, 126 N.C. App. at 216, 484 S.E.2d at 99 (holding that plaintiff had

rested her case after a summary judgment hearing and therefore could not take a

voluntary dismissal under Rule 41(a)(1)(i)). The same principle applies to other

pending dispositive orders where the plaintiff has in effect “rested his case.” See

Eubank, 2012 N.C. App. LEXIS 727, at *32 (affirming that voluntary dismissal was

ineffective, and thereby leaving in place trial court’s 12(b)(6) dismissal with

prejudice on the merits, where plaintiff took a voluntary dismissal after the trial

court announced its 12(b)(6) ruling but before it entered the formal dismissal order).

{28} Even so, a plaintiff is still entitled to take a voluntary dismissal to avoid a

pending unfavorable ruling where the plaintiff has not “rested his case” as

contemplated by Rule 41(a)(1). Wesley v. Bland, 92 N.C. App. 513, 515, 374 S.E.2d

475, 476–77 (1988) (holding that plaintiff timely took a voluntary dismissal in the

middle of a summary judgment hearing, after the court heard defense counsel’s

arguments but before plaintiff spoke). More specifically, our case law suggests that

so long as the plaintiff has not advanced its arguments about the merits of its

claims, the plaintiff has not rested his case and may use Rule 41(a)(1) to avoid a

pending dispositive ruling. See, e.g., Cassidy v. Cheek, 308 N.C. 670, 674, 303

S.E.2d 792, 795 (1983) (holding that plaintiff was permitted to voluntarily dismiss

his claims while defendant’s motion to dismiss for failure to comply with a court

order was pending); Schnitzlein v. Hardee’s Food Sys., Inc., 134 N.C. App. 153, 158,

516 S.E.2d 891, 893 (1999) (holding that plaintiff had not rested his case after the

trial court’s ruling on a 12(b)(6) motion where the motion only raised questions of

federal preemption); Lowe, 55 N.C. App. at 610–11, 286 S.E.2d at 653 (holding that

where a fully argued motion to dismiss dealt with plaintiff’s failure to comply with a

court order rather than the allegations of the complaint, plaintiffs had not “rested

their case” under Rule 41(a)(1)).

{29} Moreover, taking a voluntary dismissal after receiving an unfavorable

ruling on a non-dispositive motion is not prohibited by the second exception. In

Alston v. Duke Univ., the Court of Appeals held that the plaintiff was entitled to

take a voluntary dismissal after the trial court denied plaintiff’s motion to amend

the discovery scheduling order. 133 N.C. App. 57, 62, 514 S.E.2d 298, 301 (1999).

In fact, the plaintiff took the voluntary dismissal in the middle of a hearing on

multiple motions, including defendant’s summary judgment motion. Id. In

upholding the validity of the voluntary dismissal, the Court of Appeals considered

as significant that the plaintiff’s attorney “made it clear” that he did not wish to

argue against summary judgment prior to the trial court’s ruling on its discovery

motion and gave notice of the voluntary dismissal immediately after the trial court

announced its denial of plaintiff’s motion. Id. (“Plaintiff is not deemed to have

rested her case at that point, and was free to take a voluntary dismissal of the

action. Following Plaintiff’s voluntary dismissal, this action was not pending before

the trial court.”)

{30} In sum, the second exception identified in Brisson applies to a narrow fact

pattern, where a plaintiff who has rested its case on the merits seeks to take a

voluntary dismissal to avoid a pending ruling. Taking MassMutual’s allegations as

true, BB&T Trust took the Voluntary Dismissal to avoid the consequences of the

Court’s Order on Motion in Limine No. 1 (as it affirmed the Court’s Order on the

Motion to Amend). Those orders were final, interlocutory orders at the time BB&T

Trust dismissed its claims, and BB&T Trust could not be deemed to have “rested its

case” prior to taking the Voluntary Dismissal. Therefore, MassMutual’s argument

that BB&T Trust’s dismissal violates the second exception in Brisson is without

merit.

{31} The Court therefore concludes that BB&T Trust was within its rights in

taking the Voluntary Dismissal, and MassMutual is not entitled to relief in either

BB&T I or BB&T II based on the Motion to Set Aside Dismissal. Therefore, BB&T I

is ended, and the Court may hereafter only consider collateral issues in that action

such as costs and attorney’s fees. Bryson, 330 N.C. at 653, 412 S.E.2d at 331.

1. Attorney’s Fees

{32} MassMutual’s Motion to Set Aside Dismissal asks that the Court award it

attorney’s fees pursuant to (i) N.C. Gen. Stat. § 6-21.5, (ii) the Court’s inherent

authority to sanction litigants for vexatious litigation, and (iii) N.C. R. Civ. P. 11(a).

MassMutual seeks attorney’s fees dating back to 2012, arguing that BB&T Trust

should have taken its voluntary dismissal at that time when Judge Murphy denied

its motion to amend. For the following reasons, the Court denies MassMutual’s

request for attorney’s fees.

{33} N.C. Gen. Stat. § 6-21.5 gives the Court discretion to award attorney’s fees

“to the prevailing party if the court finds that there was a complete absence of a

justiciable issue of either law or fact raised by the losing party in any pleading.”

Although BB&T Trust voluntarily dismissed its claims without prejudice,

MassMutual may still be considered the “prevailing party” for purposes of section 6-

21.5. Bryson, 330 N.C. at 664, 412 S.E.2d at 338. MassMutual argues that an

award of fees is justified under this statute when a “losing party persisted in

litigating the case after a point where he should reasonably have become aware that

the pleading he filed no longer contained a justiciable issue.” Sunamerica Fin.

Corp. v. Bonham, 328 N.C. 254, 258, 400 S.E.2d 435, 458 (1991).

{34} A court is required to award attorney’s fees under N.C. R. Civ. P. 11(a) if a

party’s action was not “well-grounded in fact, was not legally sufficient, and was

interposed for an improper purpose.” VSD Communs. v. Lone Wolf Publ. Group,

124 N.C. App. 642, 646, 478 S.E.2d 214, 217 (1996).6 Similarly, once a “case has

become meritless, failure to dismiss or further prosecution of the action may result

in sanctions” pursuant to the Court’s inherent power. Bryson, 330 N.C. at 658, 412

S.E.2d at 334; see also Ashton v. City of Concord, No. COA02-1257, 2003 N.C. App.

LEXIS 1693, at *11 (Aug. 19, 2003) (unpublished) (affirming exercise of inherent

authority to order attorney’s fees for “vexatious conduct”).

{35} Attorney’s fees are not warranted on any of those bases here, however,

because BB&T Trust’s case never became meritless and never lacked a justiciable

issue. After Judge Murphy ruled on the motion to amend, BB&T Trust pursued

three existing claims through dispositive motions and then took a voluntary

dismissal to overcome evidentiary failures and shortcomings in the pleadings, which

are reasons recognized as legitimate under Rule 41(a)(1). Indeed, the record does

not demonstrate that BB&T Trust was vexatiously prosecuting the rejected theories

for the three years between the Order on the Motion to Amend and the filing of

MassMutual’s Motion in Limine No. 1. Rather, the issue appears to have arisen

only after the parties’ counsel began pretrial discussions and BB&T Trust indicated

6 Rule 11 sanctions and awards of attorney’s fees are generally awarded on the basis of an offending

“pleading, motion, [or] other paper of a party.” N.C. R. Civ. P. 11(a); Bryson, 330 N.C. at 655, 412

S.E.2d at 332. See, e.g., Williams v. Hinton, 127 N.C. App. 421, 424, 490 S.E.2d 239, 241 (1997)

(“Rule 11 applies only to signed pleadings, motions, or other papers. . . . This Court has pointed out

that Rule 11 is not a panacea intended to remedy all manner of attorney misconduct.”) (internal

quotations omitted). Although MassMutual does not clearly identify a specific offending paper in its

Motion, the Court will assume without deciding that MassMutual’s identification in the context of

this case is sufficient for purposes of determining whether the Court should award attorney’s fees

under Rule 11.

its intent to introduce evidence in support of the theories Judge Murphy had

rejected in the Order on the Motion to Amend. At root, MassMutual’s primary

complaint is that BB&T Trust delayed in taking a voluntary dismissal, and the

Court, in the exercise of its discretion, declines to award attorney’s fees on that

ground in these circumstances.

B. MassMutual’s Motion to Dismiss in BB&T II

{36} MassMutual moves the Court to dismiss the Complaint in BB&T II on two

grounds. First, MassMutual alleges that BB&T Trust has failed to plead a legally

cognizable injury. Second, MassMutual alleges that BB&T Trust’s claims are

barred by the applicable statute of limitations.

{37} A Rule 12(b)(6) motion to dismiss tests the legal sufficiency of the

complaint. Stanback v. Stanback, 297 N.C. 181, 185, 254 S.E.2d 611, 615 (1979).

“The motion does not present the merits, but only whether the merits may be

reached.” Concrete Serv. Corp. v. Investors Grp., Inc., 79 N.C. App. 678, 681, 340

S.E.2d 755, 758 (1986). The question on a Rule 12(b)(6) motion is whether, as a

matter of law, the allegations of the complaint, treated as true, state a claim upon

which relief can be granted. Wood v. Guilford Cty., 355 N.C. 161, 166, 558 S.E.2d

490, 494 (2002) (citation omitted). While the Court does not make findings of fact

on a motion to dismiss, the Court may consider, in addition to the complaint,

documents to which the complaint specifically refers even though presented by the

defendant. Oberlin Capital, L.P. v. Slavin, 147 N.C. App. 52, 60, 554 S.E.2d 840,

847 (2001). The Court may also consider records of which it has taken judicial

notice. Wood v. J.P. Stevens & Co., 297 N.C. 636, 641, 256 S.E.2d 692, 696 (1979)

(“[I]t is clear that judicial notice can be used in rulings on . . . motions to dismiss for

failure to state a claim . . . .”).

{38} MassMutual has asked the Court to take judicial notice of certain

documents from BB&T I. (Def.’s Mem. Supp. Mot. Dismiss 6 n.3.) A “[t]rial court[]

may properly take judicial notice of ‘its own records in any prior or contemporary

case when the matter noticed has relevance.’” Stocum, 185 N.C. App. at 61, 648

S.E.2d at 232 (quoting Kenneth S. Broun, Brandeis and Broun on North Carolina

Evidence § 26 (5th ed. 1998)); see N.C. R. Evid. 201(f) (“Judicial notice may be taken

at any stage of the proceeding.”). The Court’s prior records are relevant here

because the applicability of the Rule 41 savings provision, which is at issue in the

Motion to Dismiss, necessarily requires consideration of the claims in BB&T I. See

id. (holding that the trial court correctly took judicial notice of earlier proceedings in

a case raising Rule 41 issues). The Court therefore takes judicial notice of those

documents in BB&T I pursuant to MassMutual’s request.

1. Damages

{39} MassMutual argues that BB&T Trust has failed to allege any legally

cognizable injury in BB&T II.7 Under the terms of the BOLI Policy, MassMutual

owns the assets in the accounts holding BB&T Trust’s invested premiums. (Def.’s

Mot. Dismiss Ex. 3, hereinafter “BOLI Policy”, 10.) Relying on the complaint’s

allegation that BB&T Trust suffered damages “representing the difference in its

premium belatedly transferred into the BlackRock fund following the Falcon Fund’s

liquidation, compared to the principal that would be in the BlackRock Fund had

MassMutual reallocated pursuant to the parties’ agreement,” (BB&T II Compl. ¶

115), MassMutual therefore argues that BB&T Trust has only alleged diminution in

the value of assets that it does not own. (Def.’s Mem. Supp. Mot. Dismiss 12.)

{40} The BOLI Policy entitles BB&T Trust to receive the payment of death

benefits under the policy, (BOLI Policy 23,) or to surrender the policy for its then-

cash value, (BOLI Policy 16). MassMutual contends that BB&T Trust cannot

allege or prove damages because MassMutual has thus far paid all owed death

benefits, and BB&T Trust has not exercised and may never exercise its surrender

rights. (Def.’s Supplemental Mem. Supp. Mot. Dismiss 4.)

7 MassMutual raised this argument in BB&T I at the summary judgment stage, and the Court

(Murphy, J.) denied MassMutual’s motion. MassMutual sought to raise this argument again in

BB&T I by moving in limine to exclude BB&T Trust’s expert witness on the grounds that there were

no legally cognizable damages about which he could testify. The Court refused to consider the

argument because MassMutual’s requested relief would have required overruling Judge Murphy’s

summary judgment order. Order on Defendant’s Motion in Limine No. 2 at ¶ 7, BB&T I (N.C. Super.

Ct. Apr. 14, 2015.) The Court noted that MassMutual would have the opportunity to make the same

argument at the directed verdict stage, at which point the Court would be able to consider it on the

merits. Id.

{41} In advancing this argument, MassMutual relies on factually similar cases

from other jurisdictions. In Wilmington Trust Co. v. Metro. Life Ins. Co., the

plaintiff purchased a corporate life insurance policy from the defendant and sued

the defendant-insurer alleging that the defendant breached its contract by failing to

reallocate premiums. No. 600242/08, 2008 N.Y. Misc. LEXIS 10085, at *12–13 (N.Y.

Sup. Ct. Aug. 11, 2008). Concluding that the plaintiff only owned the “right to be

paid the benefits promised under the contracts,” which defendant had thus far

honored, and that plaintiff only alleged losses related to the decreased value of the

account, the court held that the plaintiff had failed to allege any damage other than

“unrealized losses to [defendant’s] property.” Id. at *14.

{42} In a similar case from Delaware, a plaintiff who owned a corporate life

insurance policy sought a declaratory judgment and brought several other claims

alleging that the insurer’s changes to the contract’s surrender provisions gave the

insurer improper discretion over whether and when to pay in the event of

surrender. Aviva Life & Annuity Co. v. Am. Gen. Life Ins. Co., No. 8414-VCG, 2014

Del. Ch. LEXIS 60 (Del. Ch. Apr. 29, 2014.) The Court held that the plaintiff’s

claim was not ripe for adjudication because any damages suffered to the surrender

value of the account were purely speculative until the plaintiff actually exercised its

surrender rights. Id. at *46–47.

{43} Relying on this line of cases, MassMutual also alleges that Delaware

substantive law governs Plaintiff’s claims. BB&T Trust agrees that, under the

principle of lex loci delecti, its claims for fraud and negligent misrepresentation are

governed by the laws of Delaware, where the injuries occurred. As for the breach of

contract claim, MassMutual contends that Delaware law governs because two of the

four documents relied on as part of the contract—the BOLI Policy and the Letter

Agreement—contain Delaware choice of law provisions, while the other two

documents are silent on that issue. (Def.’s Mem. Supp. Mot. Dismiss 9.) BB&T

Trust, however, believes that North Carolina substantive law must govern the

contract claim. This question is relevant to the question of damages because, under

Aviva Life, MassMutual believes that Delaware law requires a conclusion that

BB&T Trust has not suffered damages, whereas BB&T Trust argues that under

North Carolina law it would be entitled to at least nominal damages in the event of

a breach. (Def.’s Mem. Opp. Mot. Dismiss 13.)

{44} North Carolina recognizes the general principle that the law of the place

where a contract is made typically governs the contract. Fortune Ins. Co. v. Owens,

351 N.C. 424, 428, 526 S.E.2d 463, 466 (2000). Furthermore, our legislature has by

statute pronounced that “[a]ll contracts of insurance on property, lives, or interests

in this State shall be deemed to be made therein . . . .” N.C. Gen. Stat. § 58-3-1.

Construing this statute with the general principle, North Carolina law will apply

when a “close connection exists between this State and the interests insured by an

insurance policy,” although the mere presence of the insured interests at the time of

an accident is not a sufficient connection to warrant application of North Carolina

law. Fortune Ins., 351 N.C. at 428, 526 S.E.2d at 466. Here, BB&T Trust has

alleged that the BOLI Policy insures a substantial number of individuals who live

and work in North Carolina, more so than in any other state. (BB&T II Compl. ¶

41.) Viewing BB&T Trust’s allegations in the light most favorable to Plaintiff, the

Court concludes that North Carolina law may apply to the contract, although the

issue cannot be conclusively decided without factual development. See Martin v.

Cont’l Ins. Co., 123 N.C. App. 650, 656, 474 S.E.2d 146, 149 (1996) (eschewing strict

formulas for determining a sufficient “close connection”). The Court therefore views

Aviva Life as persuasive authority for purposes of this Motion under Rule 12(b)(6)

and reserves judgment concerning the applicable law for BB&T Trust’s contract

claim.

{45} Regardless of which state’s law ultimately applies to the contract, however,

the Court concludes that BB&T Trust has sufficiently alleged legally cognizable

damages to survive a Rule 12(b)(6) motion. Contrary to MassMutual’s contentions,

BB&T Trust’s allegations are not limited to the diminution in value that allegedly

occurred as a result of MassMutual’s alleged acts; the complaint specifically alleges

that BB&T was required to publicly report $17 million in losses directly related to

MassMutual’s failure to timely reallocate BB&T Trust’s premiums, (BB&T II

Compl. ¶¶ 116, 114), and BB&T Trust contends that it has suffered an actual loss

through the impairment of BB&T’s accounting and death benefits under the BOLI

Policy. (Pl.’s Resp. Br. Opp. Mot. Dismiss 14–15). In particular, BB&T Trust

alleges that it specifically paid a higher fee for the Stable Value Agreement to

protect against these types of accounting losses, which BB&T Trust argues it would

not have suffered but for MassMutual’s alleged breach of the parties’ agreement.

(BB&T II Compl. ¶¶ 116–17.) Moreover, BB&T Trust contends that the BOLI

Policy and the PPM set forth the formula by which MassMutual is required to pay

death benefits to BB&T Trust, and that certain aspects of this formula are tied to

investment performance, (BOLI Policy 23-24; PPM 11), entitling BB&T Trust to

show purported damages in the form of impaired death benefits currently payable.

(Pl.’s Resp. Br. Opp. Mot. Dismiss 14–15).

{46} Liberally construing the allegations of the Complaint in BB&T Trust’s

favor and giving BB&T Trust the benefit of all permissible inferences not

inconsistent with facts alleged, the Court cannot conclude that BB&T Trust has

failed to allege legally cognizable damages as a matter of law, particularly in light of

our Supreme Court’s instruction that “Rules 8(a) and 54(c), when read together,

reject any strict rule that a certain measure of damages must be specifically sought

in the prayer for relief.” Holloway v. Wachovia Bank & Trust Co., N.A., 339 N.C.

338, 345–46, 452 S.E. 2d 233, 237 (1994); see also, e.g., N.C. State Ports Auth. v.

Lloyd A. Fry Roofing Co., 32 N.C. App. 400, 408, 232 S.E.2d 846, 851 (1977) (“[I]t is

not crucial error to demand the wrong relief” in the complaint.).

{47} Indeed, BB&T Trust has alleged at least some actual loss, unlike the

plaintiff in Aviva Life who sought a declaratory ruling that changes in policy terms

impaired its ability to obtain the policy’s surrender value in the event of a

surrender. Aviva Life, 2014 Del. Ch. LEXIS 60, at *9. Viewing BB&T Trust’s

allegations in the light most favorable to Plaintiff, the Court concludes that BB&T

Trust has sufficiently alleged that it suffered legally cognizable damages to survive

the Motion to Dismiss and that further examination of the sufficiency of Plaintiff’s

damages claim must await a later stage of this litigation.8

2. Statute of Limitations

{48} MassMutual alternatively argues that all of BB&T Trust’s claims are time-

barred by the statute of limitations. A statute of limitations can be the basis for

dismissal on a Rule 12(b)(6) motion if the face of the complaint discloses that the

plaintiff’s claims are so barred. Reunion Land Co. v. Vill. Of Marvin, 129. N.C. App.

249, 250, 497 S.E.2d 446, 447 (1998) (citing Long v. Fink, 80 N.C. App. 482, 484,

342 S.E.2d 557, 559 (1986)).

{49} BB&T Trust’s claims for negligent misrepresentation, fraud, and breach of

contract each have a three-year statute of limitations. N.C. Gen. Stat. §§ 1-52(1),

(5), and (9). As alleged, these claims accrued more than three years ago, (Def.’s

Mem. Supp. Mot. Dismiss 15–18), and would be time-barred if they were brought for

the first time in the BB&T II complaint. However, BB&T Trust argues that the

savings provision of Rule 41(a)(1) has tolled the statute of limitations for the claims

pleaded in BB&T II.

{50} As stated above, the savings provision provides that “[i]f an action

commenced within the time prescribed therefor, or any claim therein, is dismissed

without prejudice under this subsection, a new action based on the same claim may

8 MassMutual has also raised the issue of BB&T Trust’s standing and requests the opportunity to

submit supplemental briefing on whether BB&T Trust has alleged an “injury in fact” should the

Court determine that North Carolina law applies to Plaintiff’s contract claim. ((Def.’s Reply Mem.

Supp. Mot. Dismiss 5 n.1.) Under North Carolina law, “an injury in fact” is required to establish

standing, Coker v. DaimlerChrysler Corp., 172 N.C. App. 386, 391, 617 S.E.2d 306, 310 (2005), and

“[s]tanding is a necessary prerequisite to a court's proper exercise of subject matter jurisdiction.”

Street v. Smart Corp., 157 N.C. App. 303, 305, 578 S.E.2d 695, 698 (2003) (internal quotation

omitted). Based on the Court’s conclusion that BB&T Trust has alleged in BB&T II that it suffered

an actual loss as a result of MassMutual’s alleged conduct, the Court is satisfied that, if the Court

were to apply North Carolina law to BB&T Trust’s contract claim, Plaintiff has satisfactorily pleaded

standing for purposes of Rule 12(b)(6). See, e.g., Bruggeman v. Meditrust Co., L.L.C., 165 N.C. App.

790, 795, 600 S.E.2d 507, 511 (2004) (standing requires “that the plaintiff have been injured or

threatened by injury or have a statutory right to institute an action”) (quotations and citations

omitted); In re Ezzell, 113 N.C. App. 388, 392, 438 S.E.2d 482, 484 (1994) (“[I]njury in fact” must be

“distinct and palpable—and conversely that it not be abstract or conjectural or hypothetical.”)

(internal citations and quotations omitted). Thus, the Court denies MassMutual’s request for

supplemental briefing on standing in connection with this Motion.

be commenced within one year after such dismissal . . . .” N.C. R. Civ. P. 41(a)(1).

This “long-standing rule allow[s] a plaintiff to take a voluntary dismissal and refile

the claim within one year even though the statute of limitations has run subsequent

to a plaintiff’s filing of the original complaint.” Brisson, 351 N.C. at 597, 528 S.E.2d

at 572. The extension to the statute of limitations is notably limited to refiled

actions “based on the same claim.”

{51} MassMutual argues that “same claim” requires not only that the causes of

action be the same but also that the underlying factual contentions be the same for

Rule 41(a)(1)’s savings provision to apply. BB&T Trust argues that the savings

provision has tolled the statute of limitations in this case because “[w]here, as here,

both actions involve the same parties and the same causes of action arising from the

same operative facts, the actions are ‘based on the same claims.’” (Pl.’s Resp. Br.

Opp. Mot. Dismiss 17.) Relying on our Supreme Court’s holding that a voluntary

dismissal may be used to “cure an unforeseen defect in a claim” or address

“shortcomings in the pleadings [and] evidentiary failures,” Brisson, 351 N.C. at 597,

528 S.E.2d at 573, BB&T Trust contends that a new action is “based on the same

claims” where it involves the same parties, the same right, and the same causes of

action. (Pl.’s Resp. Br. Opp. Mot. Dismiss 18.) Here, BB&T Trust has alleged

against MassMutual the same three causes of action that it dismissed in BB&T I;

the complaint in BB&T II adds factual allegations and expands the universe of

documents on which its claims rest. Therefore, the question before the Court is

whether the “same claim” requirement of Rule 41(a)(1) requires strict factual

identity between the dismissed and the refiled claims.

{52} It is clear at least that “same claim” does not include independent causes of

action with unique elements. Staley v. Lingerfelt, 134 N.C. App. 294, 299, 517

S.E.2d 392, 396 (1999). See also Losing v. Food Lion, LLC, 185 N.C. App. 278, 284,

648 S.E.2d 261, 265 (2007) (“This Court has long held that the Rule 41(a) tolling of

the applicable statute of limitations only applies to the claims in the original

complaint, and not to other causes of action that may arise out of the same set of

operative facts.”). In Staley, the Court held that claims asserted for the first time in

the refiled complaint did not get the benefit of the savings provision because,

although they arose from the same events as those alleged in the initial complaint,

“the defendants were not placed on notice that they would be asked to defend these

claims within the time required by the statute of limitations.” Staley, 134 N.C. App.

at 299, 517 S.E.2d at 396.

{53} Within this outer bound, however, a plaintiff has some room to revise its

factual allegations. For instance, a plaintiff may typically seek new types of

damages in the refiled action so long as they arise from the same causes of action

asserted in the first action. See, e.g., Holley v. Hercules, Inc., 86 N.C. App. 624,

628, 359 S.E.2d 47, 50 (1987) (holding that plaintiff’s claim for punitive damages

could be made for the first time during the one-year savings period because it was

merely derivative of the negligence claim pleaded in the first action); Royster v.

McNamara, 218 N.C. App. 520, 532–33, 723 S.E.2d 122, 131 (2012) (holding that

plaintiff’s newly-asserted claim for emotional damages was not barred by the

statute of limitations because it was simply a description of the damage that he

claimed to have suffered in the first action).

{54} Certain derivative claims may also receive the benefit of the savings

provision when pleaded for the first time in the refiled action. In Sloan v. Miller

Bldg. Corp., the Court of Appeals held that the plaintiff’s voluntary dismissal had

the effect of extending the time within which his spouse could bring her derivative

loss of consortium claim, even though she had not pleaded it in the original action.

128 N.C. App. 37, 40–41, 493 S.E.2d 460, 462–63 (1997). See also Strawbridge v.

Sugar Mt. Resort, Inc., 243 F. Supp. 2d 472, 479 (W.D.N.C. 2003) (applying North

Carolina law to determine that the savings provision protects a newly-raised plea to

pierce the corporate veil because it is a method of imposing liability and derivative

of the underlying negligence claim). Thus, strict factual identity between the

original and the refiled action is not always necessary to toll the statute of

limitations under Rule 41(a). Under Staley, the issue appears to be one of notice;

extending Rule 41 tolling to new types of damages and derivative claims does not

prejudice a defendant where the original action placed him on notice of the claims

against which he would have to defend.

{55} Nevertheless, MassMutual argues that the factual allegations underlying

the causes of action must be the same between the original and the refiled action in

light of Stutts v. Duke Power Co., 47 N.C. App. 76, 26 S.E.2d 861 (1980). In Stutts,

the Court of Appeals upheld the dismissal of the plaintiff’s refiled claim for libel and

slander as time-barred, because the second complaint was not “based on the same

claim” as the original action, which also asserted causes of action for slander and

libel. Id. at 76, 266 S.E.2d at 864. MassMutual argues that Stutts stands for the

proposition that identity of cause of action is not enough to invoke Rule 41(a)(1)

tolling, and that the factual allegations must also be identical. The first action in

Stutts alleged that Duke Power libelously reported that plaintiff was discharged for

a “dishonest act” and then “reasserted the false and libelous allegations against the

[p]laintiff” at a hearing requested by plaintiff with the North Carolina Employment

Security Commission. Id. at 79–80, 266 S.E.2d at 864 (“The first action, then, was

based upon proceedings before the Employment Security Commission . . .”) In the

refiled action, the plaintiff instead alleged that Duke Power’s agents and employees

libelously reported his termination for a “dishonest act” and then made slanderous

statements to the same effect to the plaintiff’s coworkers and prospective employers.

Id.

{56} The Court of Appeals concluded that while the defamation claims in both

suits stemmed from Duke Power’s discharge of plaintiff, “there the similarity ends.”

Id. While the causes of action were the same in both cases, the defamatory

statements were allegedly made to different audiences, at different times, by

different individuals, and in different words. The Stutts court did not announce a

standard by which a court could measure whether a refiled action is “based on the

same claim.” The Court, however, considers the heightened pleading requirements

for defamation relevant in interpreting Stutts. See id. at 84, 266 S.E.2d at 866

(requiring claims for defamation to allege the defamatory words with sufficient

particularity to enable the court to determine whether the statement was

defamatory); see also Stanford v. Owens, 76 N.C. App. 284, 289, 332 S.E.2d 730, 733

(1985) (holding that a refiled action asserting a claim for fraud was not “based on

the same claim” as an initial action alleging negligent misrepresentation, because

fraud is unique and must be pleaded with particularity). The slander claim in the

first action was essentially factually independent from the slander claim in the

second action, and the two claims could not be considered the same, despite being

titled as the same legal claim for relief.

{57} MassMutual also relies on Williams v. Lynch to argue that the Court

should scrutinize the factual allegations underlying the claims in refiled actions.

225 N.C. App. 522, 528, 741 S.E.2d 373, 377 (2013). In Williams, the Court of

Appeals held that a claim for professional malpractice in the refiled action related

back under Rule 41(a) to the plaintiff’s claims for negligence in the voluntarily

dismissed action. Id. In reaching that conclusion, the court concluded that the two

types of claims were synonymous, the plaintiff had essentially relabeled the claim,

and the claims asserted identical facts. Id. That case does not mandate, however,

as MassMutual urges, that a refiled action must contain identical factual

allegations as the initial action. Williams, by holding that Losing and Staley are

controlling, affirmed that the Rule 41(a) savings provision only applies to “those

claims in the second complaint that were included in the voluntarily-dismissed first

complaint,” id. at 526, 741 S.E.2d at 376, and those cases, as discussed above, apply

Rule 41(a) to causes of action asserted in the original complaint that give notice to

the defendant.

{58} MassMutual argues that by inserting new factual allegations and new

documents into the body of documents alleged to be the “contract,” BB&T Trust has

not asserted the “same claims” in BB&T II as it did in BB&T I. In particular, while

both complaints identify the BOLI Policy with the Stable Value Endorsement as a

“valid and binding contract” between the parties, (see BB&T I Am. Compl. ¶ 123;

BB&T II Compl. ¶ 138), MassMutual contends that the specific contractual source

of the alleged reallocation event obligations at the core of this case is the Negotiated

SVA Term Sheet in BB&T II and a document BB&T Trust acknowledges is

“materially different,” the SVA Summary, in BB&T I. (Def.’s Supplemental Mem.

Supp. Mot. Dismiss 2.) MassMutual further contends that BB&T Trust makes

certain claims in BB&T II that were “not pled at all in BB&T I.”9 (Def.’s

Supplemental Mem. Supp. Mot. Dismiss 2.)

{59} BB&T Trust responds that its Amended Complaint in BB&T I avers that

the terms of the parties’ agreement that is the subject of BB&T Trust’s claims “were

set out in the PPM, the BOLI Policy, the August 16, 2006 Letter Agreement, and

certain other representations, understandings and agreements between the

Parties.” (BB&T I Am. Compl.¶ 123). BB&T Trust contends that this latter

language—“certain other representations, understandings and agreements between

the Parties”—put MassMutual on notice that the terms of various unidentified

documents, including both the post-closing SVA Summary emphasized in BB&T I

and the pre-closing Negotiated SVA Term Sheet that is the focus of BB&T II, were

alleged to evidence the parties’ agreement. In further support, BB&T Trust alleges

that the PPM included the SVA Summary as an appendix and, because the SVA

Summary had not been prepared as of the closing, included the Negotiated SVA

Term Sheet at that time, (BB&T II Compl. ¶¶ 52, 147), providing further evidence

that the agreement alleged in BB&T I and II was the same.

{60} Although the Court is sympathetic to MassMutual’s position, particularly

in light of the passage of time since BB&T I was filed, the Court concludes that Rule

41(a)’s tolling provision extends to BB&T Trust’s claims in BB&T II. While adding

additional factual detail in BB&T II not found in BB&T I, BB&T Trust alleges the

9 In particular, MassMutual contends that BB&T Trust’s new claims include allegations that (i)

MassMutual misrepresented to BB&T Trust that the terms of the SVA would be consistent with

those of the Negotiated Term Sheet, (BB&T II Compl. ¶¶ 97–100), (ii) the 7% NAV Trigger in the

Negotiated SVA Term Sheet was hit in August 2007 without required reallocation, (Compl. ¶¶ 58,

65), (iii) the Standard Deviation Trigger was hit in August 2007 through December 31, 2007 without

required allocation, (BB&T II Compl. ¶ 65), (iv) MassMutual failed to communicate an

“Immunization Period” in the Negotiated Term Sheet in November 2007, (BB&T II Compl. ¶¶ 36,

61–63, 105, 110), and (v) MassMutual failed to disclose certain changes to Falcon Fund’s guidelines

in 2006, 2007 and 2008 (BB&T II Compl. ¶¶ 58, 69–73, 84–85, 103). BB&T Trust acknowledges that

it is asserting claims in BB&T II based on (i), (ii), and (iii) but asserts that (iv) and (v) constitute

supporting evidence and are not separate claims for relief. (Pl.’s Reply to Def.’s Resp. to Pl.’s Post-

Hearing Br. 3.)

same conduct in support of its causes of action in both operative complaints,

including the same alleged statements in August 2006 and September 2007 in

support of its fraud and negligent misrepresentation claims and the same alleged

actions constituting the alleged breach of the parties’ agreement—in particular,

MassMutual’s alleged failure to monitor BB&T Trust’s investment and to use

reasonable efforts to cause the reallocation and preservation of the investment

following the occurrence of alleged reallocation events. The terms of the parties’

agreement are alleged to exist in the same specific documents and in “certain other

representations, understandings and agreements between the Parties” in both

cases. Each operative complaint requires the factfinder to determine the terms of

the parties’ agreement based on the various documents alleged to embody those

terms.

{61} BB&T Trust has asserted the same causes of action against the same

defendant, and added factual allegations for the purpose of curing defects,

addressing shortcomings in the pleadings, and remedying evidentiary failures.

While BB&T Trust has changed its emphasis as to the specific contract document

most at issue in the two operative complaints, the Court is satisfied that the claims

asserted in BB&T I and II “arise out of the same set of operative facts,” Losing, 185

N.C. App. at 284, 648 S.E.2d at 256, the allegations in BB&T I were sufficiently

specific to place MassMutual on notice that it would have to defend these claims

within the time required by the statute of limitations, Staley, 134 N.C. App. at 299,

517 S.E.2d at 396, and the claims in the two operative complaints are “substantially

the same, involving the same cause[s] of action and the same right[s].” Cherokee

Ins. Co. v. R/I, Inc., 97 N.C. App. 295, 297, 388 S.E.2d 239, 240 (1990). The Court

thus concludes that the allegations in BB&T II are “based on the same claims” as

BB&T I for purposes of Rule 41(a) and are therefore not barred by the applicable

statute of limitations.

III.

CONCLUSION

{62} WHEREFORE, for the foregoing reasons, the Court hereby DENIES the

Motion to Set Aside Dismissal in BB&T I and DENIES the Motion to Dismiss in

BB&T II.

SO ORDERED, this the 29th day of April, 2016.

/s/ Louis A. Bledsoe, III

Louis A. Bledsoe, III

Special Superior Court Judge

for Complex Business Cases