Practice Points with Mark Scruggs: Counterclaims: Relation Back or Not?

Let me have a show of hands. Does a counterclaim relate back to the filing date of the complaint? (Raise your hand if you think so) or is the counterclaim governed by the applicable statute of limitations? (Same response). I know I’ve had this discussion with other lawyers over the years.

In perusing the new opinions from the Court of Appeals, I came across Farron Jerome Upchurch v. Harp Builders, Inc., and Valentine Joseph Cleary- 2022-NCCOA-301 (filed 3 May 2022). Farron answers the question but also points out it hasn’t been much of a question for some time.

The parties were involved in a motor vehicle accident on December 19, 2015. On December 19, 2018, Plaintiff filed a complaint alleging that defendant was at fault and seeking damages for personal injuries sustained in the accident.[1] On December 20, 2018, Defendant filed an answer and counterclaim alleging that Plaintiff was at fault and seeking damages for personal injuries sustained in the accident. There was some procedural wrangling but ultimately Plaintiff moved to dismiss Defendant’s counterclaim on grounds that it was barred by the three-year statute of limitations. The trial judge agreed and entered an order granting Plaintiff’s motion for summary judgment on Defendant’s counterclaim and dismissed Defendant's counterclaim with prejudice. Defendant appealed.

The sole issue on appeal was whether the trial court erred in granting Plaintiff’s motion for summary judgment on the ground that Defendant’s counterclaim was barred by the three-year statute of limitations. Defendant argued that his counterclaim filed on December 20, 2018, should be deemed to relate back to the filing of the original complaint by Plaintiff on December 19, 2018, and thus should be considered timely filed within the three-year statute of limitations. The Court of Appeals disagreed and affirmed the trial court’s ruling that the Defendant’s counterclaim did not relate back to the filing of the original complaint and was therefore barred by the three-year statute of limitations.

In reaching its decision, the Court of Appeals discussed a couple of earlier opinions, Brumble v. Brown, 71 N.C. 513 (1874) and In re Gardner, 20 N.C. App. 610, 202 S.E. 2d 318 (1974) that had reached the opposite result. In Brumble, the Supreme Court held that a counterclaim “refers to the commencement of the action . . . [a]nd if not barred by the statute at that time, it does not become so afterwards during the pending of the action.: 71 N.C. at 516. However, Brumble was decided before the adoption and effective date of the North Carolina Rules of Civil Procedure in 1969 and 1970 respectively.  In Burcl v. North Carolina Baptist Hospital, Inc., 306 N.C. 214, 293 S.E. 2d 85 (1982), the Supreme Court said that if the application of the North Carolina Rules of Civil Procedure dictates a result different from that arrived at in a pre-rules case, the Rules should be applied. In In re Gardner, the Court of Appeals adopted the rule in Brumble and held that the counterclaim at issue related back and was therefore not barred by the applicable statute of limitations. The Court did so even though the North Carolina Rules of Civil Procedure became effective before the original complaint was filed.

Brumble and In Re Gardner probably account for some of the uncertainty I have expressed over the years when asked whether a counterclaim relates back to the filing of the original complaint. But the answer is clear: a counterclaim does not relate back to the filing of the original complaint but rather is governed by the applicable statute of limitations.

It seems like a harsh result in this case, given that the plaintiff filed his Complaint on the last day of the statute of limitations and Defendant filed his answer on the next day – one day late. The takeaway I suppose is that if you are representing a defendant in a civil action, investigate potential counterclaims early and make sure you file the counterclaim within the applicable statute of limitations.

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[1] I can’t let this pass without begging you to not wait until the eve of the statute of limitations to file your complaint if you can help it.  It’s risky!