Izzy Air, LLC v. Triad Aviation, Inc.

284 N.C.App. 655

877 S.E.2d 65

IZZY AIR, LLC, Hugh Tuttle, and Leslie Paige Tuttle, Plaintiffs,

v.TRIAD AVIATION, INC., Defendant.

No. COA21-284

Court of Appeals of North Carolina.

Filed August 2, 2022

Crouse Law Offices, PLLC, Raleigh, by James T. Crouse, for Plaintiffs-Appellants.

Cranfill Sumner LLP, by Steven A. Bader, Raleigh, Susan L. Hofer, and Mica N. Worthy, Charlotte, for Defendant-Appellee.

COLLINS, Judge.

¶ 1 Plaintiffs Izzy Air, LLC, Hugh Tuttle, and Leslie Paige Tuttle appeal an order granting Defendant Triad Aviation, Inc.’s, Rule 12(b)(6) motion to dismiss Plaintiffs’ complaint. We affirm the trial court's order.

I. Background

¶ 2 Sometime prior to 30 September 2016, Plaintiffs Hugh Tuttle and his wife Leslie Tuttle, residents of South Carolina and the owners of Izzy Air, LLC, a Delaware corporation, hired Defendant, an aircraft maintenance and repair service located in Burlington, North Carolina, to overhaul the engine of a small aircraft owned and operated by Plaintiffs. Plaintiffs shipped the engine from South Carolina to Defendant's facility in North Carolina where it was repaired, overhauled, inspected, and tested.

¶ 3 Defendant provided Plaintiffs with a Limited Aircraft Engine Warranty ("Warranty") containing the following language pertinent to this appeal:

TRIAD AVIATION, INC. warrants the ... aircraft engine to be free from defects in materials and workmanship furnished by TRIAD for a period of one (1) year or 500 hours from the date of the first operation, or 30 days after delivery as follows.

....

8. This warranty covers only you, the original purchaser and gives you specific rights which vary from state to state..... The work to which this [l]imited warranty applies is deemed to have been accomplished at Burlington, North Carolina, and in the event of a dispute on this Warranty the laws of the State of North Carolina shall apply. To exercise your rights under this Limited Warranty, you must give prompt notice to TRIAD by telephone call or letter fully describing such defect or failure.

(Emphasis added).

¶ 4 The Tuttles took the aircraft with the newly-serviced engine out for a flight in South Carolina on 30 September 2016. Hugh Tuttle piloted the plane and Leslie Tuttle was the sole passenger. Shortly after takeoff, the engine began "running rough," and "began cutting in and out." Hugh Tuttle declared an emergency and attempted to land at a nearby airport. Before the Tuttles made it to the airport, the engine failed. Hugh Tuttle was forced to make an emergency landing in a field. The plane was damaged beyond repair and the incident caused Plaintiffs "serious personal and psychological injuries."

¶ 5 Plaintiffs notified Defendant of the engine failure and emergency landing within a reasonable time after the incident and repeatedly notified Defendant thereafter. Despite these notifications and "despite having actual knowledge of the in-flight failure of [the] engine which it had overhauled and a claim made thereupon," Defendant "refused to honor the express warranty it provided on its work and parts supplied for [the] engine."

¶ 6 On 15 September 2020, Plaintiffs filed a second amended complaint against Defendant alleging a single cause of action for violation of North Carolina's Unfair and Deceptive Trade Practices Act, N.C. Gen. Stat. §§ 75-1.1 et seq. ("UDTP"). Defendant filed a Rule 12(b)(6) motion to dismiss, arguing that South Carolina's statute of limitations applied to Plaintiffs’ claim pursuant to North Carolina's borrowing statute, N.C. Gen. Stat. § 1-21, and that Plaintiffs’ UDTP claim was time-barred under South Carolina's three-year statute of limitations. After a hearing on Defendant's motion to dismiss, the trial court granted the motion with prejudice by written order entered 22 December 2020. Plaintiffs timely appealed.

II. Discussion

¶ 7 Plaintiffs argue that the trial court erred by granting Defendant's Rule 12(b)(6) motion to dismiss.

A. Standard of Review

¶ 8 "In considering a motion to dismiss under Rule 12(b)(6), the Court must decide 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." CommScope Credit Union v. Butler & Burke, LLP , 369 N.C. 48, 51, 790 S.E.2d 657, 659 (2016) (quotation marks and citations omitted). On appeal, we review de novo a trial court's grant of a motion to dismiss pursuant to Rule 12(b)(6). Id.

B. Analysis

¶ 9 The dispositive issue on appeal is whether the borrowing provision of N.C. Gen. Stat. § 1-21 requires application of South Carolina's three-year statute of limitations and thus bars Plaintiffs’ UDTP claim.

¶ 10 "Our traditional conflict of laws rule is that matters affecting the substantial rights of the parties are determined by lex loci, the law of the situs of the claim, and remedial or procedural rights are determined by lex fori, the law of the forum." Boudreau v. Baughman , 322 N.C. 331, 335, 368 S.E.2d 849, 853-54 (1988). "Ordinary statutes of limitation are clearly procedural, affecting only the remedy directly and not the right to recover." Id. at 340, 368 S.E.2d at 857.

¶ 11 However, "[o]ur General Assembly provided a legislative exception to the traditional rule by enacting a statute containing a limited ‘borrowing provision.’ " George v. Lowe's Cos. , 272 N.C. App. 278, 280, 846 S.E.2d 787, 788 (2020) (quoting Laurent v. USAir, Inc. , 124 N.C. App. 208, 211, 476 S.E.2d 443, 445 (1996) ). "Pursuant to N.C. Gen. Stat. § 1-21, where a claim arising in another jurisdiction is barred by the laws of that jurisdiction, and the claimant is not a resident of North Carolina, the claim will be barred in North Carolina as well:" id. ,

[W]here a cause of action arose outside of this State and is barred by the laws of the jurisdiction in which it arose, no action may be maintained in the courts of this State for the enforcement thereof, except where the cause of action originally accrued in favor of a resident of this State.

N.C. Gen. Stat. § 1-21 (2020). South Carolina Code § 39-5-150 provides that no action under the South Carolina Unfair Trade Practices Act may be brought more than three years after discovery of the unlawful conduct that is the subject of the suit. S.C. Code § 39-5-150 (2020).

¶ 12 In this case, it is undisputed that Plaintiffs were not residents of North Carolina at any relevant time; they were residents of South Carolina. It is also undisputed that Plaintiffs’ lawsuit was filed on 15 June 2020, after the three-year statute of limitations for an unfair trade practices claim in South Carolina had run. See id. Accordingly, we must only determine whether Plaintiffs’ UDTP "cause of action arose outside of this State," N.C. Gen. Stat. § 1-21, such that the borrowing provision applied.

1. Contract's Choice of Law Provision

¶ 13 Plaintiffs argue that because the parties’ agreed in the Warranty that North Carolina law would apply in the event of a dispute on the Warranty, North Carolina's four-year statute of limitations under N.C. Gen. Stat. § 75-16.2 applies to their UDTP claim; thus, the claim is not time barred. We disagree.

¶ 14 "[P]arties to a business contract may agree in the business contract that North Carolina law shall govern their rights and duties in whole or in part ...." N.C. Gen. Stat. § 1G-3 (2020). In this case, the operative portion of the Warranty states, "in the event of a dispute on this Warranty the laws of the State of North Carolina shall apply." By its plain terms, this provision dictates that North Carolina law governs a warranty dispute; this provision does not dictate that North Carolina law governs all litigation between the parties.

¶ 15 As neither an intentional breach of contract nor a breach of warranty, standing alone, is sufficient to maintain a UDTP claim, Mitchell v. Linville , 148 N.C. App. 71, 74, 557 S.E.2d 620, 623 (2001), the Warranty's choice-of-law provision does not specifically apply to Plaintiff's UDTP claim. Conversely, the provision is not sufficiently broad to encompass Plaintiff's UDTP claim. See Lambert v. Navy Fed. Credit Union , 2019 WL 3843064, at *6, 2019 U.S. Dist. LEXIS 138592, at *17 (E.D. Va. Aug. 14, 2019) (holding that the choice of law language in the parties’ contract was "sufficiently broad" to preclude plaintiff's North Carolina UDTP claim). Accordingly, North Carolina law, and specifically its four-year statute of limitations, does not apply to Plaintiff's UDTP claim by virtue of the terms of the Warranty.

¶ 16 Nonetheless, even if the choice-of-law provision in the Warranty were construed to apply to Plaintiff's UDTP claim, North Carolina's four-year statute of limitations would not automatically apply. Applying "the laws of the State of North Carolina" to Plaintiff's UDTP claim would nonetheless necessitate a determination of whether the borrowing provision of N.C. Gen. Stat. § 1-21 requires the application of South Carolina's three-year statute of limitations to Plaintiffs’ UDTP claim.

2. Where the Cause of Action Arose

¶ 17 Plaintiffs further argue that "the acts and events that form the basis for Plaintiffs’ [UDTP] claim occurred in North Carolina" not South Carolina; because the cause of action did not arise outside of this State, the borrowing statute does not apply. We disagree.

¶ 18 In ascertaining whether Plaintiffs’ UDTP action arose outside of this State, we are guided by our Court's choice-of-law analysis in the context of UDTP claims. Our North Carolina Supreme Court has not addressed the proper choice-of-law test for UDTP claims, and there is a split of authority in our Court on the appropriate rule to be applied. Stetser v. TAP Pharm. Prods. Inc. , 165 N.C. App. 1, 15, 598 S.E.2d 570, 580 (2004). Under the most significant relationship test, the court looks to "the law of the state having the most significant relationship to the occurrence giving rise to the action." Andrew Jackson Sales v. Bi-Lo Stores, Inc. , 68 N.C. App. 222, 225, 314 S.E.2d 797, 799 (19...