The Plaintiff in Stratton v. Royal Bank of Canada, 2010 NCBC 2 (N.C. Super. Ct. February 5, 2010) thought she had struck it rich. She had found a 1927 stock certificate in the name of her late mother for five shares of stock in the Bank of Manteo. Plaintiff’s calculation was that her mother’s shares of stock, following various mergers, were the equivalent of 14,486 shares of RBC common stock. That’s about $765,000.
The problem for the Plaintiff — and the reason that summary judgment was entered against her — was that she had known about the stock certificate since 1982 and that her mother had known that the Bank hadn’t recognized her as a shareholder since well before that. The Plaintiff furthermore had over the years asked bank employees, stockbrokers, and lawyers about the stock, but she hadn’t done anything to begin a lawsuit.
The dismissal was based on laches, "an equitable doctrine ‘designed to promote justice by preventing surprises through the revival of claims that have been allowed to slumber until evidence has been lost, memories have faded, and witnesses have disappeared.’" Op. ¶33. A party defending on the basis of laches is required to show "that (a) the plaintiff negligently failed to assert an enforceable right within a reasonable time and (b) the defendant was prejudiced by the delay in bringing the action." Op. ¶36.
Judge Jolly ruled that Plaintiff and her mother had known about the first merger of the Bank of Manteo, with Planters National Bank, and had known that the Bank didn’t consider Plaintiff’s mother to have been a shareholder after that merger took place in 1962. He said:
Given the small size of the town and Inge’s extended residence there over several decades, the court determines there is no genuine question that Inge knew of the merger. There is no evidence that Inge received dividends or any other incidents of share ownership during that time, and the court concludes that it is undisputed that Inge knew or should have known the Bank of Manteo and its successors no longer considered her to be a shareholder.
The long delay in pursuing the claim had prejudiced the Bank. Judge Jolly held that "the passage of time has (a) made appropriate written records unavailable and (b) precluded RBC or its predecessors from talking effectively with witnesses or Inge, who either now are deceased or whose memory about such a transaction that took place many years ago most likely would have deteriorated materially, to the prejudice of the Defendant."
The Court also ruled that claims for constructive trust, conversion, and unjust enrichment were barred by the applicable statutes of limitation.