News

Rule 12(b)(6) Motions: Are They Worth It? See Also: An Invitation To The NCADA Annual Meeting

23 Mar 2022 12:46 PM | Jennifer Edwards (Administrator)

By Josh Durham, Bell Davis Pitt

North Carolina’s Rule 12(b)(6) provides, in theory, a powerful tool for a defendant to dismiss a lawsuit in its early stages. A challenge under the rule compels the trial court to consider “whether the pleadings, when taken as true, are legally sufficient to satisfy the elements of at least some legally recognized claim.”i  A motion under Rule 12(b)(6) is properly granted when (1) no law supports the plaintiff’s claims, (2) the complaint does not plead sufficient facts to state a legally sound claim, or (3) the complaint discloses facts that necessarily defeat the plaintiff’s claims.ii 

In other words, Rule 12(b)(6) can provide a much-desired early exit to litigation, sparing a defendant substantial expense and saving considerable time.

But there is often still a cost to pursue such a motion. Many of our commercial litigation section members practice in the North Carolina Business Court, the state’s specialized forum for cases involving complex and significant issues of corporate and commercial law. While motions in non-Business Court cases frequently do not require briefs, briefs are mandatory in Business Court cases, and they must accompany the motion.iii In 2017, the Court made clear that any defendant pursuing a motion to dismiss under Rule 12(b)(6) must do so, with a motion and supporting memorandum, prior to serving an answer.iv At least in the Business Court, this put an end to the common practice of placeholder motions to dismiss in answers, to be followed later by a more formal motion and brief.v

These days, nearly every type of case could merit a Rule 12(b)(6) motion. For example, in suits accusing another of misappropriating a trade secret, the rule can be used to dismiss the case because a plaintiff did not sufficiently describe the alleged secret. Sued for violating a covenant not to compete? Use the rule to challenge the reasonableness of the time, geography, and scope restrictions in the covenant. Rule 12(b)(6) is frequently used in corporate disputes to challenge whether an owner in a closely held entity owed fiduciary duties to another owner. And if a complaint makes reference to a contract, but does not attach it, a defendant can use the rule to introduce the actual contract.vi  At that point, while still under the rule, the defendant can show that a plaintiff’s claims are clearly contrary to the parties’ written agreement.

But, are such motions ultimately worth it?

Each year, the state’s Business Court judges participate as a panel in various continuing education events. In such panels, the judges offer views from the bench, practice pointers, and tips for successfully navigating Business Court practice and procedure. Recently, one of the judges spoke on motions to dismiss under Rule 12(b)(6). The judge confirmed that nearly every type of case could merit such a motion, estimating that nine out of ten cases before the court involve a Rule 12(b)(6) motion.

And he suggested they may not always be the best approach. 

Why? A dismissal under Rule 12(b)(6) is not always with prejudice, which means the case will not necessarily end if the motion is granted. A dismissal without prejudice allows a plaintiff to amend its claims, fixing any shortcomings in the allegations. The decision whether to dismiss a case with prejudice or without prejudice (and whether to allow a plaintiff to amend its claims) is entirely within the court’s discretion.vii A quick survey of Business Court cases within the last six months shows the court often exercises that discretion to dismiss cases without prejudice. Such cases include claims for:

  •         Negligent misrepresentation;iix
  •        Rescission of a shareholder agreement;ix
  •       Tortious interference with contract;x and
  •        Appointment of an independent person to investigate derivative          claims under N.C. Gen. Stat. § 57D-8-03(f);xi

At the recent event, the judge suggested parties should instead consider addressing shortcomings in pleadings without the court’s involvement. In other words, because a motion to dismiss and briefs from the parties might very well result in a plaintiff being given the chance to amend, the parties might save themselves considerable time and expense by just working through a complaint’s shortcomings on their own. And, if a defendant files a motion and memorandum but does not file an answer to the complaint, the plaintiff can amend the complaint as a matter of right. This moots the entire motion and memorandum. The judge suggested this was all the more reason to meet and confer, so to speak, regarding any alleged deficiencies in a complaint. Doing so could avoid having to prepare for a hearing that will ultimately not happen.

The judge’s comments at the recent program follow comments from another judge at past events. With regard to trade secret claims, the judge suggested it might make for a better strategy to refrain from 12(b)(6) motions that attack the sufficiency of a complaint’s trade secret description. Instead, a party should consider whether to wait to attack the trade secret claim at summary judgment, when, if a motion is successful, the case will indeed be over.

These comments are definitely food for thought, and Rule12(b)(6) strategies definitely merit further discussion.

That is why, at this year’s Annual Meeting in Wilmington, the Commercial Section will be holding a breakout session on June 18 to specifically discuss Rule 12(b)(6) strategies. We are planning an engaging session with insight from an esteemed panel and robust discussion from attendees.

We hope to see you there!

  iArroyo v. Scottie’s Prof’l Window Cleaning, Inc., 120 N.C. App. 154, 158, 461 S.E.2d 13, 16 (1995). 

  iiOates v. JAG, Inc., 314 N.C. 276, 278, 333 S.E.2d 222, 224 (1985).

 iiiBCR 7.5.

 ivNew Friendship Used Clothing Collection, LLC v. Katz, 2017 NCBC 71 (N.C. Super. Ct. Aug. 18, 2017).

 vAdmittedly, I had done this in a case before the Business Court, filing a formal motion and memorandum more than a year after serving the answer.

 viErie Ins. Exch. v. Builders Mut. Ins. Co., 227 N.C. App. 238, 242, 742 S.E.2d 803,808 (2013).

  viiFirst Fed. Bank v. Aldridge, 230 N.C. App. 187, 191, 749 S.E.2d 289 (2013).

  iixBotanisol Holdings II, LLC v. Propheter, No. 21 CVS 102, 2021 WL 4844528, at *9 (N.C. Super. Oct. 18, 2021).

 ixLoyd v. Griffin, No. 20 CVS 2394, 2021 WL 5865360, at *8 (N.C. Super. Dec. 10, 2021).

 xId.

 xiNorris v. Greymont Dev., LLC, No. 21 CVS 12659, 2022 WL 278278, at *8 (N.C. Super. Jan. 31, 2022).


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