The plaintiff in this case, a South Carolina registered corporation, appealed from the trial court's order granting the motion to dismiss by the defendant who is a resident of Wake County. The plaintiff obtained a money judgment against the defendant in Wake County Superior Court on July 30, 2010.

The defendant filed a voluntary petition for Chapter 7 bankruptcy in the Eastern District of North Carolina on July 8, 2018. The Bankruptcy Court denied Defendant's discharge, terminated the automatic stay against enforcement on June 19, 2020, and specifically ruled that "the automatic stay pursuant to 11 U.S.C. § 362(d) is lifted and modified to permit [Plaintiff] to proceed with an action to renew the State Court judgment." The plaintiff filed the underlying action to renew its money judgment against Defendant almost two years later on June 10, 2022, and the defendant filed a motion to dismiss pursuant to Rule 12(b)(6) of the North Carolina Rules of Civil Procedure, the granting of which gave rise to this appeal.

11 U.S.C. Sec. 108(c) deals with the tolling effect of the automatic Bankruptcy Stay under Federal law and provides:

(c) ... if applicable non-bankruptcy law ... fixes a period for commencing or continuing a civil action in a court other than a bankruptcy court on a claim against the debtor, or against an individual with respect to which such individual is protected under ...this title and such period has not expired before the date of the filing of the petition, then such period does not expire until the later of-

(1) the end of such period, including any suspension of such period occurring on or after the commencement of the case; or
(2) 30 days after notice of the termination or expiration of the stay ... with respect to such claim.

The fundamental issue before the Court of Appeals was whether the ten-year Statute of Limitations applicable under N.C.G.S. Section 1-47 to bringing actions on a judgment had been tolled sufficiently by the automatic stay imposed by the plaintiff's Chapter 7 bankruptcy filing to render the action timely.

The Court of Appeals determined that this issue was one of first impression in North Carolina rendering it "appropriate to look to decisions from other jurisdictions for persuasive guidance." The opinion states:

Our review has revealed the following:

1. Smith v. Lachter
A Bankruptcy Appellate Panel for the United States Court of Appeals for the Ninth Circuit held a judgment creditor's inability to enforce a due to bankruptcy, did not extend the deadline imposed by Arizona Rev. Stat. §§ 12-1551 and 12-1612 to file a renewal affidavit. Smith v. Lachter (In re Smith), 352 B.R. 702, 705-06 (B.A.P. 9^th Cir. 2006). The court further held 11 U.S.C. § 108(c)(1) does not extend additional time for creditors to renew their judgment. Id.

2. Aslanidis v. United States Lines
The United States Court of Appeals for the Second Circuit also held 11 U.S.C. § 108(c) does not provide for the tolling of any externally-imposed statute of limitations, but only calls for applicable time deadlines to be extended for 30 days after termination of the bankruptcy stay, provided such a deadline would have fallen on an earlier date. Aslanidis v. United States Lines, 7 F.3d 1067, 1072-73 (2d Cir. 1993) ("Commencing with the plain meaning, we observe that by its terms § 108(c) does not provide for tolling of any externally imposed time bars, such as those found in the two maritime statutes of limitations. The bankruptcy section only calls for applicable time deadlines to be extended for 30 days after the termination of a bankruptcy stay, if any such deadline would have fallen on an earlier date. The reference in § 108(c)(1) to 'suspension' of time limits clearly does not operate in itself to stop the running of a statute of limitations; rather, this language merely incorporates suspensions of deadlines that are expressly provided in other federal or state statutes.").

The Court observes that:

Section 108(c)(2) provides for thirty (30) additional days to renew the judgment after the bankruptcy stay is lifted. The stay was lifted on 19 June 2020. Thirty days after the stay was lifted occurred on 20 July 2020. Since the original North Carolina Statute of Limitations had not expired when the stay was lifted, Plaintiff had forty days after the stay was lifted to file the extension before the deadline to renew expired. Plaintiff only would have been granted the thirty days extension after dismissal of his bankruptcy petition, if the ten-year deadline had expired while the stay remained in effect. 11 U.S.C. § 108(c). Plaintiff's argument is overruled. Id.

The plaintiff argued that N.C.G.S. Section 1-23 (2023) tolls the statute of limitations. This statute provides:

"When the commencement of an action is stayed by injunction or statutory prohibition, the time of the continuance of the injunction or prohibition is not part of the time limited for the commencement of the action." Id.

With little North Carolina appellate guidance, this writer has observed that legal pundits have long speculated with little consensus as to how the courts would apply this statute under facts like those presented in this action. The Court, with a very literal interpretation, concluded that the "...commencement of the action to renew the judgment was not 'stayed by [an] injunction or statutory prohibition.' Id." (emphasis added)

The opinion goes on to state that:

A prior panel of this Court examined the tolling provision of the 10-year statute of limitations under N.C. Gen. Stat. § 1-47 to determine whether it tolled a judgment filed nunc pro tunc following a motion to amend the judgment. K&S Res., LLC v. Gilmore, 284 N.C. App. 78, 83-85, 875 S.E.2d 538, 542-44 (2022). This Court held N.C. Gen. Stat. §§ 1-15, 1-23, 1-234 (2023) and N.C. R. App. P. 62(a) and 62(b) did not provide for tolling. Id. There was no "existence of any statutory tolling provision affecting the applicable 10-year statute of limitations in this action." Id. N.C. Gen. Stat. § 1-23 does not apply. N.C. Gen. Stat. § 1-23. Plaintiff's argument is overruled.

The Court unanimously concluded that the deadline to file an action on the judgment expired on July 29, 2020 and that the trial court properly granted the defendant's motion to dismiss (note that the initial release of this opinion erroneously stated: "Plaintiff's Motion to dismiss...")

Unless reversed by the North Carolina Supreme Court upon discretionary review, this opinion will settle the question of whether or how an intervening bankruptcy filing will extend a statute of limitations applicable to a judgment disclosed in the title examination of a property.