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  "name": "MARQUIS D. STREET, Plaintiff on behalf of Himself and All Others Similarly Situated v. SMART CORPORATION, Defendant",
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    "judges": [
      "Judges MARTIN and GEER concur."
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    "parties": [
      "MARQUIS D. STREET, Plaintiff on behalf of Himself and All Others Similarly Situated v. SMART CORPORATION, Defendant"
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      {
        "text": "EAGLES, Chief Judge.\nMarquis D. Street (\u201cplaintiff\u2019) appeals from the trial court\u2019s order dismissing plaintiff\u2019s complaint because of lack of standing. After careful consideration of the briefs and record, we affirm.\nPlaintiff is a personal injury attorney and a resident of Greensboro. Four individuals were injured in separate motor vehicle accidents occurring from 31 December 1998 to 16 October 2000. Two of the individuals received medical treatment from Moses H. Cone Memorial Hospital and/or Moses Cone Health System, one received treatment from Southeastern Orthopaedic Specialists, and another received treatment from Wesley Long Hospital. The four individuals each retained plaintiff to represent them in their separate liability claims for personal injury. For each individual client, plaintiff, with proper authorization, requested his client\u2019s \u201cmedical records relating to the medical services rendered\u201d by the respective medical treatment providers.\nSmart Corporation (\u201cdefendant\u201d), a California corporation, provides photocopies and reproductions of medical records for healthcare providers in North Carolina for a fee. Defendant provided photocopies of medical records for each of plaintiffs four clients. For each client\u2019s records, defendant sent plaintiff an invoice which was paid by plaintiff.\nPlaintiff commenced this action alleging that defendant submitted invoices charging in excess of the amount allowable under North Carolina state law, G.S. \u00a7 90-411. Plaintiff also alleged that defendant\u2019s actions constituted an unfair and deceptive trade practice in violation of G.S. \u00a7 75-1.1. Defendant answered and raised several defenses including lack of standing, failure to name the real party in interest, and lack of subject matter jurisdiction.\nDefendant moved to dismiss pursuant to the North Carolina Rules of Civil Procedure Rule 12(b)(1) and (6) alleging that \u201cthe [p]laintiff is not the real party in interest and therefore lacks standing,\u201d that \u201cthere is no private cause of action under [G.S.] \u00a7 90-411\u201d and that \u201c[p]laintiff\u2019s claims are barred by the voluntary payment doctrine.\u201d The trial court granted defendant\u2019s motion to dismiss with prejudice \u201con the grounds that the plaintiff is not the real party in interest and has no standing to prosecute this action.\u201d Plaintiff appeals.\nOn appeal, plaintiff contends that the trial court erred in granting defendant\u2019s Rule 12(b)(6) motion to dismiss because plaintiff is the real party in interest and does have standing. After careful consideration, we disagree and affirm.\nPlaintiff argues that he is the direct purchaser of the photocopies of the medical records which provides him with standing. In the alternative, plaintiff argues that he is an indirect purchaser and would have standing in a state action. Plaintiff further argues that equity would dictate that he be allowed to pursue an action because he could be sued by defendant for not paying for the records. Also, plaintiff argues that instead of dismissing the action, the trial court should have continued the matter to allow the plaintiff to substitute the real party in interest. Though we are concerned with the cumulative effect of defendant\u2019s alleged overcharges, we are not persuaded.\nHere, the trial court\u2019s order does not specify whether it applied Rule 12(b)(1) or (6). The trial court\u2019s order states that the motion to dismiss \u201cis GRANTED and this action is dismissed with prejudice on the grounds that the plaintiff is not the real party in interest and has no standing to prosecute this action.\u201d We note that the plaintiff contends that the trial court erred in granting defendant\u2019s Rule 12(b)(6) motion to dismiss for lack of standing. However, defendant\u2019s motion to dismiss raises both Rule 12(b)(1) and (6) as grounds for dismissal. While the practical effect of either a Rule 12(b)(1) or 12(b)(6) dismissal of a complaint is the same, i.e. the case is dismissed, \u201cthe legal effect is quite different.\u201d Cline v. Teich, 92 N.C. App. 257, 263, 374 S.E.2d 462, 466 (1988). \u201c \u2018[A] dismissal under b(l) is not on the merits and thus is not given res judicata effect.\u2019 \u201d Id. at 264, 374 S.E.2d at 466 (citation omitted) (emphasis in original). A Rule 12(b)(6) dismissal \u201cis an adjudication on the merits\u201d that \u201cbars subsequent reliti-gation of the same claim.\u201d Id. Here, the trial court dismissed the action with prejudice. This implicates a Rule 12(b)(6), rather than a Rule 12(b)(1), dismissal.\n\u201cA lack of standing may be challenged by motion to dismiss for failure to state a claim upon which relief may be granted. Rule 12(b)(6) \u2018generally precludes dismissal except in those instances where the face of the complaint discloses some insurmountable bar to recovery.\u2019 \u201d Energy Investors Fund, L.P. v. Metric Constructors, Inc., 351 N.C. 331, 337, 525 S.E.2d 441, 445 (2000) (citations omitted). When deciding a Rule 12(b)(6) motion to dismiss, \u201call factual allegations in the complaint are taken to be true.\u201d Cline, 92 N.C. App. at 259, 374 S.E.2d at 463.\n\u201cStanding refers to whether a party has a sufficient stake in an otherwise justiciable controversy such that he or she may properly seek adjudication of the matter.\u201d American Woodland Industries v. Tolson, 155 N.C. App. 624, 626, 574 S.E.2d 55, 57 (2002). \u201c \u2018Standing is a necessary prerequisite to a court\u2019s proper exercise of subject matter jurisdiction.\u2019 \u201d Neuse River Foundation, Inc. v. Smithfield Foods, Inc., 155 N.C. App. 110, 113, 574 S.E.2d 48, 51 (2002) (quoting Aubin v. Susi, 149 N.C. App. 320, 324, 560 S.E.2d 875, 878 (2002)). \u201cThe gist of standing is whether there is a justiciable controversy being litigated among adverse parties with substantial interest affected so as to bring forth a clear articulation of the issues before the court.\u201d Texfi Industries v. City of Fayetteville, 44 N.C. App. 268, 269-70, 261 S.E.2d 21, 23 (1979), aff'd, 301 N.C. 1, 269 S.E.2d 142 (1980). \u201cStanding most often turns on whether the party has alleged \u2018injury in fact\u2019 in light of the applicable statutes or caselaw.\u201d Neuse River Foundation, Inc., 155 N.C. App. at 114, 574 S.E.2d at 52.\n\u201cEvery claim must be prosecuted in the name of the real party in interest.\u201d Goodrich v. Rice, 75 N.C. App. 530, 536, 331 S.E.2d 195, 199 (1985). See also G.S. \u00a7 1A-1, Rule 17(a) (2001); G.S. \u00a7 1-57 (2001). \u201c \u2018 \u201cA real party in interest is a party who is benefited or injured by the judgment in the case. An interest which warrants making a person a party is not an interest in the action involved merely, but some interest in the subject-matter of the litigation.\u201d \u2019 \u201d Energy Investors Fund, L.P., 351 N.C. at 337, 525 S.E.2d at 445 (citations omitted).\nThe Revised Rules of Professional Conduct of The North Carolina State Bar state: \u2022\nRule 1.8 Conflict of interest: Prohibited transactions and other specific applications.\n(e) A lawyer shall not provide financial assistance to a client in connection with pending or contemplated litigation except that a lawyer may advance court costs and expenses of litigation including expenses of investigation and medical examinations and cost of obtaining and presenting evidence, provided the client remains ultimately liable for such costs and expenses.\nRev. R. Prof. Conduct N.C. St. B. 1.8(e), 2003 Ann. R. (N.C.) 625 (emphasis added).\nHere, the plaintiff alleged in his amended complaint that each of the four named clients were overcharged by defendant for photocopies of their medical records. Plaintiff further alleged that the \u201c[p]laintiff, in order to obtain the medical records, paid the defendant\u2019s invoice in an amount in excess of amounts chargeable under N.C.G.S. 90-411.\u201d The plaintiff advanced the costs \u201cin order to obtain the medical records\u201d but the individual clients remain liable for those costs. While the plaintiff might have an interest in the action because he advanced certain costs on behalf of his clients, he does not have an interest in the subject matter of the litigation because he is not ultimately responsible for those costs. The plaintiff has not suffered an injury and does not have standing to pursue this action. The plaintiff is not the real party in interest. The plaintiff will not benefit from or be injured by the judgment because he is not ultimately responsible for the costs.\nThe plaintiff cites McCarthy v. Recordex Service, Inc., 80 F.3d 842 (3rd Cir. 1996) to support his contention that he has standing. In McCarthy, plaintiff-clients brought an action against defendants that included hospitals and medical records providers. Id. at 845. The issue there was \u201cwhether the plaintiff-clients, whose attorneys purchased photocopies of the clients\u2019 hospital records for the purpose of prosecuting their clients\u2019 personal injury and medical malpractice claims, have standing to bring an antitrust action against the sellers of the photocopies.\u201d Id. at 844. McCarthy held that the plaintiff-clients were not \u201cdirect purchasers\u201d of the photocopies and lacked standing to bring a federal antitrust action. Id. The court noted that the plaintiff-clients\u2019 attorneys were the direct purchasers of the records. Id. at 852. McCarthy is distinguishable from this case. In McCarthy, the plaintiff-clients entered into contingent fee agreements with their respective attorneys. Id. at 845. The agreements provided that plaintiff-clients would not be responsible for reimbursing the law firms for advancing certain costs of litigation if the plaintiff-clients did not receive a monetary award. Id. at 845-46. The Pennsylvania Rules of Professional Conduct provide that \u201ca lawyer may advance court costs and expenses of litigation, the repayment of which may be contingent on the outcome of the matter.\u201d Id. at 858 n.2 (Stapleton, J., dissenting). Here, the Revised Rules of Professional Conduct of The North Carolina State Bar do not allow the reimbursement of costs advanced by an attorney to be contingent upon the outcome of the action. An attorney in North Carolina may only advance costs on behalf of a client so long as the plaintiff client remains ultimately liable for those costs. Rev. R. Prof. Conduct N.C. St. B. 1.8(e), 2003 Ann. R. (N.C.) 625.\nIn the alternative, the plaintiff argues that he is an indirect purchaser and would have standing in a state action. Plaintiff cites Hyde v. Abbott Laboratories, 123 N.C. App. 572, 473 S.E.2d 680, disc. review denied, 344 N.C. 734, 478 S.E.2d 5 (1996) in support of his argument. In Hyde, this Court held \u201cthat indirect purchasers have standing under [G.S.] \u00a7 75-16 to sue for Chapter 75 violations.\u201d Id. at 584, 473 S.E.2d at 688.\nIn Hyde, the plaintiffs were \u201cindirect purchasers from the defendant manufacturers because they purchased infant formula through parties other than the manufacturer.\u201d Id. at 574, 473 S.E.2d at 681-82. This Court further held that \u201cthe General Assembly clearly intended to expand the class of persons with standing to sue for a violation of Chapter 75 to include any person who suffers an injury under Chapter 75, regardless of whether that person purchased directly from the wrongdoer.\u201d Id. at 577, 473 S.E.2d at 684 (emphasis added).\nHere, the plaintiff is not an indirect purchaser either. The plaintiff has not suffered an injury. He has advanced the costs of the medical records on behalf of his clients yet his clients remain ultimately liable for those costs.\nPlaintiff also argues that Gualtieri v. Burleson, 84 N.C. App. 650, 353 S.E.2d 652, disc. review denied, 320 N.C. 168, 358 S.E.2d 50 (1987) supports his contention that he is the real party in interest and has standing. In Gualtieri, an expert witness sued an attorney to recover unpaid compensation for services rendered by the expert witness. Id. at 651, 353 S.E.2d at 653. On appeal, the defendant lawyer argued that he was \u201cnot liable because he \u2018identified himself as an attorney representing [his client],\u2019 thereby making \u2018it clear that he acted in a representative capacity for a disclosed principal.\u2019 \u201d Id. at 653, 353 S.E.2d at 655. The Gualtieri court affirmed the trial court\u2019s conclusion that the \u201cdefendant [attorney] personally contracted to pay plaintiff [expert witness] for the services admittedly rendered.\u201d Id. The Gualtieri court noted that \u201c[t]rial lawyers are always making contracts with court reporters, investigators, and experts\u201d and that \u201cthere is no inhibition in the law against a lawyer contracting to pay for services needed in a case he is handling.\u201d Id. at 653-54, 353 S.E.2d at 655. The court further provided that the Rules of Professional Conduct of The North Carolina State Bar allow an attorney to \u201cadvance or guarantee litigation expenses for his clients, provided the client remains ultimately liable to him for such expenses.\u201d Id. at 654, 353 S.E.2d at 655. The court noted that the evidence did not show that plaintiff expert witness was aware of defendant attorney\u2019s client \u201cas a hirer of expert services\u201d or that defendant attorney\u2019s client \u201cauthorized defendant [attorney] to do so upon her credit.\u201d Id. The court stated that\nidentifying himself as a lawyer with a disabled client, all that defendant did according to the evidence, was not sufficient in our opinion to establish that he was not the one contracting to pay for plaintiff\u2019s services. For when a lawyer hiring an expert to help on a case says or does nothing to indicate that the obligation to pay is not his, the expert can reasonably assume, it seems to us, that the lawyer is acting openly and in good faith, rather than evasively, and that he is the contracting party, rather than a stranger he has had no contact with.\nId.\nHere, plaintiff\u2019s amended complaint alleges that he represented the four clients. With each request for medical records, the plaintiff provided \u201cthe requisite client authorization for release of medical records.\u201d The issue is not whether the plaintiff contracted with the defendant to provide medical records, but whether the plaintiff has standing to sue the defendant for alleged overcharging of costs for which the plaintiff is not ultimately liable.\nPlaintiff also argues that the trial court should have allowed a continuance for the plaintiff to substitute the real party in interest instead of dismissing the action. We do not agree.\nRule 17(a) of the North Carolina Rules of Civil Procedure states \u201c[n]o action shall be dismissed on the ground that it is not prosecuted in the name of the real party in interest until a reasonable time has been allowed after objection for ratification of commencement of the action by, or joinder or substitution of, the real party in interest.\u201d G.S. \u00a7 1A-1, Rule 17(a) (emphasis added).\nHere, the record does not reflect any attempt on behalf of plaintiff or request by plaintiff to substitute the real party in interest. The defendant raised the defense of real party in interest in their answer of 24 August 2001. Defendant moved to dismiss on 8 March 2002 and the trial court heard the motion in April 2002. Plaintiff was aware of the real party in interest defense for approximately seven months before the hearing based on defendant\u2019s answer and for approximately three weeks based on the motion to dismiss.\nHere, the plaintiff has not personally suffered an injury because of the alleged overcharge for records. The plaintiff is relying on injuries that have been sustained by individuals plaintiff represents in an attorney-client relationship. Because of the Revised Rules of Professional Conduct, plaintiff cannot pay those costs on his clients\u2019 behalf, he may only advance the costs so long as his clients remain ultimately liable for them. Because the plaintiff here is not ultimately responsible for the costs, the plaintiff neither has standing to pursue the action nor is the real party in interest.\nAccordingly, the decision of the trial court is affirmed.\nAffirmed.\nJudges MARTIN and GEER concur.",
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    "attorneys": [
      "Donaldson & Black, P.A., by Arthur J. Donaldson and John T. O\u2019Neal, for plaintiff-appellant.",
      "Womble Carlyle Sandridge & Rice, PLLC, by Hada V. Haulsee and Michael Montecalvo, for defendant-appellee."
    ],
    "corrections": "",
    "head_matter": "MARQUIS D. STREET, Plaintiff on behalf of Himself and All Others Similarly Situated v. SMART CORPORATION, Defendant\nNo. COA02-661\n(Filed 15 April 2003)\nParties\u2014 real party in interest \u2014 lack of standing\nThe trial court did not err by granting defendant corporations\u2019s N.C.G.S. \u00a7 1A-1, Rule 12(b)(6) motion to dismiss plaintiff personal injury attorney\u2019s complaint for lack of standing in an action concerning defendant corporation\u2019s alleged overcharging for the purchase of photocopies of medical records for plaintiff\u2019s clients in excess of the amount allowable under N.C.G.S. \u00a7 90-411, because: (1) while plaintiff might have an interest in the action based on the fact that he advanced certain costs on behalf of his clients, he does not have an interest in the subject matter of the litigation since he is not ultimately responsible for those costs; (2) plaintiff will not benefit from or be injured by the judgment since he is not ultimately responsible for the costs; and (3) plaintiff is not the real party in interest, and the record does not reflect any attempt on behalf of plaintiff or request by plaintiff to substitute the real party in interest.\nAppeal by plaintiff from order entered 4 April 2002 by Judge Charles C. Lamm, Jr. in Guilford County Superior Court. Heard in the Court of Appeals 24 February 2003.\nDonaldson & Black, P.A., by Arthur J. Donaldson and John T. O\u2019Neal, for plaintiff-appellant.\nWomble Carlyle Sandridge & Rice, PLLC, by Hada V. Haulsee and Michael Montecalvo, for defendant-appellee."
  },
  "file_name": "0303-01",
  "first_page_order": 335,
  "last_page_order": 342
}
