Senate Judiciary Committee Takes No Action On Fourth Circuit Nominees

Today the Senate Judiciary Committee held an executive business meeting to discuss the nominations of (among others) Fourth Circuit nominees Terrence Boyle and William Haynes. The Committee, however, took no action on these nominations, making it unlikely there will be any action on them before the November election.

Herald Sun Article On Challenges of State-Wide Judicial Campaigns

A 9/23/06 article in the Herald Sun reports on challenges facing state-wide judicial candidates with small campaign budgets and NC's four-year-old taxpayer-financed campaign system for those candidates.

N.C. Center For Voter Education Launches "Judge For Yourself" Podcasts And Radio Spots

The nonpartisan N.C. Center for Voter Education is launching "Judge for Yourself," a special series featuring exclusive interviews with candidates running in the Nov. 7 election for the N.C. Supreme Court and Court of Appeals.

The public will be able to download free podcasts, available at www.ncvotered.com and through iTunes.

And starting Mon., Sept. 25th, "Judge for Yourself" will air in the Raleigh-Durham area on 570-AM WDOX and 1180 WYRN each Mon. and Wed. morning at 7:30. New and archived episodes will also be available online at www.stategovernmentradio.com.

Justice Timmons-Goodson and Judges Calabria and Levinson To Speak In Charlotte

The Charlotte Observer reports here that Justice Patricia Timmons-Goodson, who is running to keep her seat on the NC Supreme Court, will be speaking at a lunch event in Charlotte tomorrow, 9/21, and Appeals Court Judges Ann Marie Calabria and Eric Levinson, candidates for the N.C. Supreme Court, will be speaking in Charlotte on 9/27.

COA: Outrageous Assertions Tainted By Emotion Are Not Actionable Defamation

In Daniels v. Metro Magazine Holding Co., L.L.C., decided Sept. 19, the COA affirmed the dismissal of a libel action brought against Metro Magazine and its editor/publisher, Bernie Reeves. The upshot: factual assertions that malign a person in her trade or profession may not be actionable as defamation if the assertions are obviously tainted by the emotion or indignation of an outraged or frustrated writer/speaker.

The case was brought by an insurance claims adjuster for Progressive Insurance Co. who claimed that a Metro Magazine essay written by Reeves defamed her in her profession as an insurance adjuster. Reeves' essay was about a bad experience he had after his car was stolen. The thief crashed the car into a pole, causing the engine to catch on fire. Reeves contacted his insurer, Progressive, and dealt with plaintiff. According to Reaves' essay, plaintiff:

*accused him of stealing his own car;
*forbade him from seeing his car;
*undertook actions equivalent to those of the former Soviet security police;
*spoke to him in a sinister voice and in a Gestapo voice;
*would've taken him to the gas chamber had his insurance agent not prevented it;
*was a fascist.

A defamation action will not lie if the challenged statement can't reasonably be interpreted as stating actual facts about a person. Thus, an expression of opinion isn't actionable. Also, "rhetorical hyperbole" isn't actionable, even if the writer/speaker appears to make a factual assertion, because a reasonable reader/listener wouldn't take the assertion seriously. The COA ruled that many of Reeves' challenged statements obviously were either statements of opinion (e.g., that plaintiff spoke in a "sinister" or "Gestapo" voice) or hyperbole (e.g., that she intended to take him to a "gas chamber" or that her actions were equivalent to those of the "former Soviet security police"). Alluding to the frivolous tone of Reeves' piece, the court observed that Reeves' statement that plaintiff was a fascist was contradicted by Reeves' comparison of her to communists. (A reasonable reader, the court indicated, would know that someone can't be both a fascist and a communist!)

As for the remaining statements, most notably Reeves' assertions that plaintiff accused Reeves of stealing his own car and forbade him from seeing his car, the court recognized that these statements were factual assertions and provided a stronger basis for a libel claim. But the court concluded that "when the article is read as a whole, it is clear that Reeves' depiction of the processing of his claim is a highly individualized, personal interpretation tainted by his own emotions, rather than a journalistic, factual recounting of events." In the essay "Reeves is obviously disgruntled and frustrated by what he perceives to be Progressive's and plaintiff's negative attitudes towards his claim," and a "reasonable reader readily perceives that Reeves is highly sensitive and irrational regarding even the most basic of plaintiff's actions in processing his claim." His "obvious emotion and irrationality, combined with the absurd tone of the piece, greatly detract from his credibility and provide the reader with facts from which his or her own conclusions may be drawn." A reasonable reader, the COA said, would recognize Reeves' statements as an "expression of outrage" and discredit them as such. Common sense prevails. Thus, Reeves' assertions that plaintiff accused him of stealing his own car and forbade him from seeing his car were not actionable.

This case is important because defamation actions frequently arise from negative statements maligning products, companies, and business persons. Often the assertions are colored by emotion, outrage, and frustration. It will be interesting to see how broadly this decision is be applied.

Recordation of Exercise of Lease Renewal Options Not (Yet) Required Under NC Statute

In Spruce Pine Industrial Park, Inc. v. Explosives Supply Company, the COA made clear that N.C. Gen. Stat. § 47-18 does not (yet) require the exercise of an option to renew or extend a lease to be recorded.

N.C. Gen. Stat. § 47-18 requires that conveyances of land, contracts to convey, options to convey, and leases for more than three years be recorded in order to be valid against lien creditors or purchasers. The COA stated that the statute "has not been extended to apply to the exercise of an option to renew or extend a lease."

In a concurring opinion, Judge Bob Hunter noted that "the extension of section 47-18(a) to options to renew or extend leases would certainly assist and simplify the task of title examination in this State," but stated that augmenting the statute "is a legislative task, not a judicial one."

Does Spruce Pine Industrial Park foreshadow legislative change requiring recordation of exercised options to renew or extend leases? We'll watch and let you know.

COA Refuses To Extend 'Completed And Accepted Rule' To Service Contracts

In Griggs v. Shamrock Bldg. Servs., Inc., filed today, the COA refused to extend what is known as the 'completed and accepted rule' to service contracts and signaled the potential future demise of the rule in NC.

Under the completed and accepted rule, an independent contractor is generally not liable for injuries to third persons after the contractor has completed the work and the work has been accepted by the owner. The Griggs court pointed out that only three prior NC cases deal with the completed and accepted rule. One of those cases, Thrift v. Food Lion, Inc., 111 N.C. App. 758, 433 S.E.2d 481 (1993), rev'd 336 N.C. 309, 442 S.E.2d 504 (1994), stated that NC courts have applied the completed and accepted rule only in the context of construction contracts, refused to extend the rule to the delivery of goods, and noted that the rule was in decline.

Today the COA found Griggs, in which Shamrock Building Services cleaned plaintiff's workplace (RPM Wood Finishes Group) and allegedly left a slick residue on which plaintiff slipped and fell, to be most analogous to the ice delivery at issue in Thrift. Similar to Thrift, therefore, the COA "decline[d] to extend the application of the rule to service contracts." Importantly, the COA also noted that the accepted and completed rule has come under attack and "decline[d] to expand the application of the rule when the rule is being abandoned, even in the context of construction contracts, in favor of modern rules of foreseeability."

Griggs makes clear that folks outside the construction arena should not pin their hopes on the completed and accepted rule but should expect general principles of negligence to govern. Further, Griggs indicates that our courts are aware of the completed and accepted rule's demise elsewhere and could be inclined to follow suit in the future.

Senator Kyl: Judge Boyle Deserves Courtesy Of A Vote

Senator Kyl (R-Az), who serves on the Senate Judiciary Committee, published this article today urging the Senate to vote on Judge Boyle's nomination to the U.S. Court of Appeals for the Fourth Circuit. Judge Boyle was first nominated to the Fourth Circuit 15 years ago, in 1991, and was re-nominated in 2001. He finally received a hearing in March 2005, four years after he was re-nominated. Because of a filibuster threat, his nomination did not move to the Senate floor, and President Bush had to re-nominate him again earlier this month.

Yet Another Arbitration Ruling From The COA

Kiell v. Kiell, filed Sept. 5, addresses whether a plaintiff has a right to a jury trial on "gateway" issues relating to the enforceability of an arbitration agreement. The short answer: "no."

After the plaintiff filed suit, the defendant moved to compel arbitration on the basis that the parties' agreement had an arbitration clause. The plaintiff opposed the motion, contending that the arbitration agreement was not enforceable. Specifically, she contended she was fraudulently induced to enter the arbitration agreement and that even if the agreement was not void she was entitled to rescission since the defendant himself had breached the agreement. The plaintiff claimed that she was entitled to a jury trial on those issues (fraudulent inducement and breach) -- even though the NC Uniform Arbitration Act (UAA) requires that a trial judge (as opposed to a jury) must summarily determine whether a valid arbitration agreement exists. The trial court bought the plaintiff's argument, holding that the UAA's requirement was unconstitutional as applied to her claims of fraudulent inducement and breach of contract, because the plaintiff had a constitutional right to a jury trial on those issues.

The COA reversed on multiple grounds. One was particularly interesting as it was not raised by the parties. The COA observed that the enforceability of the arbitration agreement was a separate issue from the merits of the plaintiff's suit; no matter how the enforceability issue was decided, it wouldn't resolve the merits of her underlying claims. Citing NC Supreme Court precedent from 1939 (a case neither party cited), the COA held that the right to a jury trial does not extend to issues that "form no part of the ultimate relief sought and do not affect the final rights of the parties." The case reminds us that the jury right is not as broad as many are led to believe. (The case also reminds us that Judge Geer, the author of the opinion, does her own legal research.)

COA: Objections To Untimely Arbitration Awards Must Be Made Before Award Is Entered

In the NC COA's Carroll v. Ferro, filed Sept. 5, the COA sent a warning to parties to arbitrations: If you want to raise untimeliness of an award as a basis for vacating the award, you had better lodge a timely objection.

In Carroll, the arbitrator made an award outside the 30-day period mandated by AAA. The defendants (James Ferro, Delphin Properties, Community Land Associates, and Associates Housing Finance) argued that the award's untimeliness constituted "exceeding the powers" of the arbitrator, a ground for vacatur. But instead of making an untimeliness objection upon the passage of the 30-day period, the defendants objected only after the arbitrator made an award that was not in their favor. The COA "h[e]ld that failure to object to the untimeliness of the award before entry constitutes a waiver, regardless of whether defendants base their claim on 9 U.S.C. § 10 or N.C. Gen. Stat. § 1-567.13 (2002)." While N.C. Gen. Stat. § 1-567.13 has been repealed, the similar N.C. Gen. Stat. § 1-569.1 et seq. have taken its place and therefore Carroll's holding would seem as applicable under current NC law as it was under N.C. Gen. Stat. § 1-567.13 in Carroll.

Carroll underscores what appears to be a popular theme in our appellate courts these days: You snooze, you lose. For example, in State v. Dennison, the COA held an objection to what the COA determined to be impermissible evidence was properly preserved where defense counsel filed a pre-trial motion to exclude the evidence, objected to cross-examination of the defendant about the evidence, and moved to strike the examination of another witness about the evidence at the conclusion of that examination. The Supreme Court reversed, holding that because defense counsel didn't object during the testimony of the witness whose testimony he then moved to strike, the objection was waived.

Take-away point: If you want to be sure to preserve an objection for review, time is of the essence.

Our Mission Statement

This blog highlights developments in the appellate courts that affect business interests in North Carolina. We concentrate on civil decisions of the North Carolina Supreme Court and the North Carolina Court of Appeals, as well as civil decisions of the U.S. Court of Appeals for the Fourth Circuit that interpret or apply North Carolina substantive law. We also feature developments on North Carolina appellate practice and procedure. The attorneys running this blog are appellate lawyers located in the State's capital, a stone's throw from North Carolina's appellate courts.

Burley Mitchell
Sean Andrussier
Sarah Buthe