Failure To File Notice Of Appeal Constitutes Ineffective Assistance Of Counsel

In United States v. Poindexter, the Fourth Circuit held that a lawyer's failing to timely file notice of appeal when unequivocally instructed by his client to do so, thereby depriving his client of an appeal, constitutes ineffective assistance of counsel under the Sixth Amendment.

NC SCT Splits On Public Duty Doctrine

In Multiple Claimants v. NCDHHS, the NC Supreme Court split as to whether the public duty doctrine blocked the plaintiff inmates' suit, with the majority holding it did not. The majority, authored by Justice Timmons-Goodson, held that statutes to benefit a certain class, inmates, and inmates' inability to care for themselves, created a special relationship, an exception to the public duty doctrine.

The dissent, authored by Chief Justice Parker and joined by Justice Brady, underscored that operating a local prison is a public (and primarily county) duty that cannot serve as the basis for a civil suit. Moreover, the dissent would have held that no special relationship existed because the statutes at issue go only to the state's general governmental roles in assisting counties with operating their prisons and because the legislature did not intend, with those statutes, to have the state become the guarantor of every local prison's safety.

NC SCT Opinions and Orders Released

Today the NC Supreme Court released orders and opinions. The Court issued 14 opinions. Twelve of them are criminal cases. One is a tort claim against the state (a split decision over the application of the public duty doctrine). The other is a juvenile neglect case.

Judge Becton To Be NC Bar President

Charles Becton, a COA judge from 1981 to 1990, was just elected to become the NC Bar Association's first African-American male president. Becton's term will begin in June 2008. According to the N&O, Becton "see[s] this as a tremendous opportunity". (Note that the N&O reports Becton to be the first African-American president; actually, Judge Allyson Duncan was the first, in 2003.)

Dissents

Yesterday Judge Tyson dissented in four cases, stretching his lead as the top dissenting judge this year on the COA.

In the month of June, there were a total of 13 dissenting opinions in the COA. The COA issued 76 published opinions in June. So dissents were filed in 17% of the published cases.

Of course, under NC law, a dissent gives the losing party an automatic right of appeal to the SCT, which means, theoretically, the greater the number of dissents, the more work for the SCT.

COA: Lawyer's Trust Account Check Better Than Personal Check

Today in an appeal by the caveator in In re Will of Turner, the COA confronted this issue: when a caveator gives the clerk of court a check drawn on the trust account of a local law firm, does that check constitute a "bond" or "money" in lieu of a bond under the relevant statute; or, does the check constitute neither under In re Will of Winborne (N.C. 1950), which held, in construing the same statute, that a personal check drawn on an out-of-state bank and "deposited with the clerk is not a bond, and it does not constitute cash deposited in lieu of bond within the meaning of the statute."

The trial court dismissed the case, holding that the check wasn't a bond or money in lieu of a bond, and that therefore the caveator didn't properly file within the statute of limitations.

The COA reversed. The COA distinguished Winborne on the basis that a check drawn on a lawyer's trust account is more reliable and secure than a personal check drawn on a bank. Hmm. I wonder whether the banks would agree.

COA Finds Minimum Contacts Lacking For Personal Jurisdiction

Today in Lulla v. Effective Minds, LLC, the Court of Appeals (COA) reversed the trial court's finding that it had personal jurisdiction over defendants. The COA held that minimum contacts required by the Due Process Clause were lacking. The case alleged breach of contract. The COA reiterated that the mere act of entering into a contract with a resident of NC will not provide sufficient minimum contacts, and the COA emphasized there was no evidence that the contract was entered into in NC or was to be performed in NC.

Dogwood and McKinley Reprise

Two weeks ago we chronicled the divide in the Court of Appeals (COA) over the handling of rule violations in the wake of the NC Supreme Court's recent decisions in State v. Hart and Walsh v. Town of Wrightsville Beach. (See my posts here and here.) Specifically, two weeks ago, in Dogwood Dev. & Mgmt. Co. v. White Oak Transp. Co. and McKinley Bldg. Corp. v. Alvis, two split panels reached conflicting decisions with respect to the same rule violations, with one panel voting 2-1 to dismiss the appeal, and the other panel voting 2-1 not to dismiss. Judge Tyson (the author or Dogwood and the dissenter in McKinley) voted for dismissal in both cases. Judge Hunter voted against dismissal in both Dogwood and McKinley. Judge Jackson wrote McKinley (not dismissing).

Well, today the McKinley panel -- Jackson, Hunter, and Tyson -- issued another decision, splitting again on whether to dismiss an appeal for rules violations. As in McKinley, Judge Jackson wrote the majority opinion, joined by Judge Hunter; Judge Tyson dissented, voting to dismiss. The case is Peverall v. County of Alamance.

The violations: failure to include statement regarding standard of review (as required by Rule 28(b)(6)) and incorrect references to record after assignments of error. The majority decided the violations weren't so egregious as to warrant dismissal, and elected instead (as in McKinley) to order plaintiff's counsel to pay the printing costs of this appeal pursuant to Rule 34(b).

Judge Tyson, whose view appears to be that any rule violation justifies dismissal, cited Stann v. Levine (N.C. App. 2006), a split decision where Judge Jackson, joined by Judge Tyson, dismissed an appeal for noncompliance with Rule 28(b)(6)'s "standard of review" requirement. That decision by Judge Jackson, however, was decided before the Supreme Court decision last month in State v. Hart and followed in a post-Viar line of cases repudiated by the Supreme Court in Hart.

Thus, in the span of two weeks, the COA has managed to generate three split decisions for potential Supreme Court review. And this happened in just the first month post-Hart, before remand decisions issued in Hart and Walsh. With these decisions, the Supreme Court may finally have to confront this issue: Is the COA really "suspending" the rules (per Rule 2) when the COA enforces the rules and sanctions the appellant under Rules 25 and 34 for noncompliance, while reviewing the merits? In today's case, for example, the majority enforced Rule 28(b)(6) (standard of review) by sanctioning the appellant's counsel; the majority did not "suspend" the rule.

The dissent sees this as a Rule 2 case. I don't agree. Rule 28(b)(6) doesn't say, "A failure to state the standard of review renders the appeal nonreviewable." If it did say that, then I could buy the argument that the COA would have to "suspend" Rule 28(b)(6) in order to review the merits (i.e., suspend the hypothetical no-review requirement); and then we could quibble about the scope of discretion conferred by Rule 2 . But Rule 28(b)(6) doesn't say that.

As I see it, the majority enforced Rule 28(b)(6) by sanctioning the violation; consequently, there was no "suspension" of that rule; therefore, Rule 2 is irrelevant.

For those of you who follow these rule violation cases, feel free to post your comments.

COA Chides Trial Court, Vacates Gag Order

In Beaufort County Board of Education v. Beaufort County Board of Commissioners, the COA took a trial court to task for not only imposing a prior restraint on the parties and their lawyers but for indicating it was choosing not to follow state statute and precedent.

In Beaufort, the school board sued the commissioners alleging that the commissioners deliberately underfunded the public school system. WNCT-TV, a tv station operated by Media General, the appellant in this case, tried to cover the case, but the trial court imposed a gag order forbidding the parties and their lawyers from communicating with the media about the case.

Media General immediately challenged the gag order, to no avail, and the case proceeded to trial, making the challenged gag order seemingly moot. Yet the COA held that even though the sought relief can no longer be granted, this case falls into the mootness exception of "capable of repetition, yet evading review," because the trial was short, appellate review cannot swiftly be had, and the trial court failed to rule on a Media General motion challenging the gag order. (Interestingly, while the COA addressed the mootness issue, it did not even mention Media General's third-party standing to appeal the gag order, even though it appears no prior NC appellate court has addressed the issue.)

The COA then held that the gag order barring the parties and their lawyers from talking to the media constituted a prior restraint yet the trial court failed to make findings to support conclusions of 1) a clear threat to fairness at trial, 2) the threat's being posed by the publicity being restrained, and 3) the unavailability of a less restrictive alternative--all required for a gag order to be upheld.

The COA spent more space taking the trial court to task for making what appears to have been a conscious decision to disregard seemingly controlling NC law. During a Media General challenge to the gag order, Medial General's lawyers invoked Sherrill v. Amerada Hess Corp., 130 N.C. App. 711, 504 S.E.2d 802 (1998), which the Beaufort COA indicated is controlling here, as well as statutory authority. The trial court then responded asking how many trial court judges sat on the Sherrill panel or drafted the statute, and said that he "as always . . . [was] concerned that the parties that make the decisions that impact these processes have never tried a case, never been in a courtroom. . . . it's troublesome to me that a lot of decision-making goes on that's made by people who have never been there and done that." The COA "educated" the trial court that the appellate courts make the law that is binding on the trial courts and that without judicial subordination, "every court would be a law unto itself." The COA further "educated" the trial court that the members of the Sherrill panel were indeed prior trial court judges (which is irrelevant, as made clear by the COA's first point). And the COA said that the trial court's remarks were "irrelevant, repugnant, and reflect a disdain for both the legislative and judicial processes." Ouch.

The COA also quickly addressed Media General's argument that N.C. Gen. Stat. sec. 1-72.1, providing procedures for asserting the right to access to judicial proceedings and records, barred the gag order. While the he COA stated that "[u]nder the facts and issues before us, it is unnecessary to determine the outer ranges of what constitutes 'access to a civil judicial proceeding,'" the COA indicated the facts here were beyond that outer range, underscoring that Media General was not prevented from attending proceedings or getting records.

COA Affirms Denial of Class Cert.

In Peverall v. County of Alamance, filed today, the COA affirmed the denial of class certification. The COA held that the named plaintiff needed but failed to show numerosity, commonality, and adequacy of representation.

Peverall, a county employee, retired due to disability in 1999. Shortly after Peverall's retirement, the county, which was self-insured, passed an ordinance retroactively changing the length of service required for county employees to receive disability insurance benefits from 5 years to 20 years. Peverall, who had served for more than 5 but less than 20 years, brought a putative class action against the county, but the trial court denied class certification.

The COA held that the trial court did not err in finding no numerosity making joining all parties impracticable. The number of potential plantiffs actually effected by the ordinance was only 7. And the COA held the trial court did not abuse its discretion in refusing to certify a class consisting of people beyond those 7 who might or might not be effected by the county's change from 5 to 20 years.

The COA also held that the trial court did not abuse its discretion in determining that common issues did not predominate. Central to that determination was the fact that Peverall retired before the county ordinance changed the requisite service time, while the other potential plaintiffs retired only after the change had gone into effect.

The COA then looked to the trial court's determination that Peverall would not have been an adequate representative. The COA held that because Peverall and the other potential 6 plaintiffs retired under different disability benefit regimes, they have different claims and damages. The COA, in its adequacy analysis, looked to Harrison v. Wal-Mart, 170 N.C. App. 545, 613 S.E.2d 322 (2005). The COA indicated that the Harrison court upheld denial of class cert. "based upon, inter alia, the trial court's finding that a conflict of interest existed between class members who each had different oral contacts with their employer for lunch and rest breaks." The COA thereby characterized Harrison much more broadly than that case reads. Harrison, in its adequacy/conflicts of interest analysis, supported denying class cert. not simply due to differing contracts or damages amongst putative class members but due to conflicts between class members who acted as supervisors and the class members they supervised, who alleged that supervisory class members contributed to wrongs.

COA Recognizes "Obstruction Of Justice" Tort, Even When Alleged Obstruction Doesn't Occur In Pending Case

Today the Court of Appeals (COA) recognized the existence of a civil cause of action for "obstruction of justice," but rejected a cause of action for spoliation. The case is Grant v. High Point Regional Health System.

This began as a potential med mal case concerning a hospital's alleged failure to diagnose cancer. After the patient died of cancer, his estate's lawyer wrote the hospital and requested medical records including x-rays. The hospital didn't respond to the lawyer's request. Evidence showed that the x-rays were at the hospital at the time of the request. When the lawyer pressed on and ultimately subpoenaed the x-rays, the hospital said the x-rays missing. Alleging that the lack of x-rays precluded a med mal case from going forward, the estate sued the hospital based on the loss of x-rays, alleging the hospital intentionally or recklessly destroyed the x-rays or negligently failed to preserve them.

The estate pleaded two claims: (1) common law obstruction of justice and (2) spoliation. The trial court dismissed the complaint.

The COA reversed, holding that a cause of action exists at common law for obstruction of justice, that the estate stated a claim for obstruction of justice, and that it didn't matter that no case was pending at the time of the alleged obstruction (i.e., it didn't matter that plaintiff didn't allege the hospital obstructed justice in a pending case). What does it take to plead this cause of action? According to the COA, a defendant is liable if it engages in "acts which obstruct, impede or hinder public or legal justice." The estate stated a claim, the COA held, by alleging that the hospital prevented, obstructed, or impeded justice by precluding the filing of a civil action.

In a separate holding, the COA rejected a cause of action for spoliation of evidence. States have divided over whether spoliation gives rise to a tort action, as opposed to (only) sanctions in a pending case. The Fourth Circuit has held, as a matter of federal law, that spoliation is not a substantive claim or defense but instead is a rule of evidence administered at the discretion of the trial court. Today's holding (that spoliation isn't a substantive claim) may not be such a big deal, given the COA's recognition of a tort for "obstruction of justice." Indeed, in rejecting a spoliation cause of action, the COA held that "it is clear that any wrong alleged by Plaintiff in the present case is not without a remedy because we have already held that Plaintiff stated a cause of action for common law obstruction of justice."

Today's ruling highlights the risks attendant to the destruction or loss of evidence, including electronic data, when litigation is reasonably foreseeable. Many assume that such matters are evidentiary matters dealt with by trial judges in pending cases, in response to motions for sanctions (under Rule 37 or in the trial court's inherent authority), where sanctions may range from an award of costs, to the admission/exclusion of evidence, to an adverse inference instruction, to the dismissal of a claim. But today's case suggests additional exposure in the form of tort liability, with the specter (presumably) of punitive damages, for "obstruction of justice." In this sense, a dispute over lost or missing evidence (e.g., electronic data) becomes the case itself, and not simply a matter of potentially sanctionable conduct within the case.

In today's case, for example, the hospital will now be litigating (in part) a case about the destruction or loss of x-rays, with a jury (if it gets that far) asked to make findings of fact as to how and why the x-rays disappeared and the hospital's state of mind. However, it would seem that in order to prove compensatory damages of the type the estate really would be interested in, the estate would have to prove (as a matter of causation) that had the x-rays been preserved, the estate would've prevailed in its med mal action. (The estate is contending that its actual damages from the alleged obstruction include "all damages [Plaintiff] could have recovered from wrongful death and medical negligence -- i.e. medical expenses, funeral expenses, pain and suffering, loss of services, protection, care and assistance, society, companionship, comfort and guidance, kindly offices and advice.") In this sense, the "obstruction of justice" suit will resemble a legal malpractice action, with causation posing an obstacle to recovery. Like the plaintiff in a legal malpractice action, the plaintiff must prove that but for the alleged wrongful acts or omissions, the plaintiff would've prevailed in the litigation.

COA Finds Waiver Of Arbitration Right

Today in Capps v. Virrey, the Court of Appeals (COA) held that the plaintiff waived his right to compel arbitration against in insurance company (Nationwide) by participating in discovery not available in arbitration.

The COA reiterated that courts scrutinize allegations of waiver; that doubts should be resolved against a finding of waiver; and that the party claiming waiver must show prejudice. But the COA found waiver, because Plaintiff had served on the insurer a set of interrogatories, a request for admissions, and three document requests. The COA stressed that "[a]pplying the Rules of Civil Procedure and Evidence to arbitration negates the very purpose for agreeing to arbitrate," and that therefore the "procedural and evidentiary rules governing judicial proceedings do not apply to arbitrations absent plain and unambiguous language in the arbitration agreement that those rules apply." In this case, the arbitration agreement's language wasn't plain and unambiguous, the COA held. Although the agreement said "Arbitration will be subject to the usual rules of procedure and evidence in such county and state," the COA held that this language "clearly" refers to the rules and procedures set forth in the Uniform Arbitration Act (which contains its own rules regarding discovery), not the "usual rules" of civil procedure and evidence.

The COA did reject one finding by the trial court: that plaintiff had waived his right to arbitration by appearing at a deposition noticed by Nationwide. The COA found that plaintiff was required to appear at the deposition, so that couldn't be a basis for waiver.

Today's decision is consistent with other state and federal decisions on waiver. It drives home the point that if you're going to contend that a case belongs in arbitration, you need to move for arbitration at the outset.

Fourth Circuit Issues Important Arbitration Case; Also Invokes Preemption For State-Law Claims Against State-Chartered Banks Under FDIA

Yesterday, in Discover Bank v. Vaden, the Fourth Circuit, in a split decision, issued an important decision involving the Federal Arbitration Act (FAA).

To simplify, here's what happened. Discover Bank (Discover), a state-chartered, federally insured bank, sued Vaden in state court for failing to pay her credit card balance. It was a state law claim. There wasn't diversity to establish federal jurisdiction.

Vaden counterclaimed with state law claims. She alleged breach of contract and violation of Maryland's (usury) statutes regulating interest rates.

Believing that Vaden's state law counterclaims were completely preempted by federal law governing banks, Discover filed a petition in federal court seeking to compel arbitration of her counterclaims, based on an arbitration clause in Discover's cardmember agreement. (The FAA doesn't itself confer federal jurisdiction.)

The district court held that Vaden's state court usury counterclaims were completely preempted and granted Discover's request for arbitration. The Fourth Circuit affirmed.

First, the majority held that the "complete preemption" doctrine applied, even though the preempted claims were counterclaims. The majority emphasized that complete preemption is an exception to the rule (the well-pleaded complaint rule) that a case generally may not be removed to federal court solely because of a defense or counterclaim arising under federal law (i.e., it's an exception to the general rule that federal jurisdiction must appeal on the face of the complaint).

Second, in an issue not reached by the dissent, the majority held that Vaden's state law usury claims were completely preempted by the Federal Deposit Insurance Act (FDIA). Specifically, the majority held that section 27(a) of the FDIA completely preempts state-law usury claims against a state-chartered, federally insured bank. The U.S. Supreme Court had previously held (in 2003) that the National Bank Act completely preempts state-court usury claims against national banks. The majority reasoned by analogy that the FDIA should preempt claims against a state-chartered, federally insured bank.

The dissent (by district judge Goodwin) took issue with federal jurisdiction. He contended that federal question jurisdiction can't be predicated on federal issues that may arise in an action by way of defense or counterclaim. To him, there could be no federal jurisdiction because there was no diversity jurisdiction and no federal question appeared on the face of the complaint. He argued that the majority erred in using complete preemption, which he deemed a removal doctrine, to recharacterize a state court counterclaim as federal. "The majority fails to recognize that complete preemption is solely a removal doctrine that is analytically applied to recharacterize allegations made in a plaintiff's complaint," the dissent emphasized.

Points To Consider About McKinley and Dogwood

I originally posted these considerations yesterday in my post on Dogwood and McKinley (see below). But the post was so long I decided to break this out separately.

• The majority opinion in Dogwood distinguished Hart on several grounds. First, Hart was a criminal case. This is true, but when it issued Hart, the SCT also reversed Walsh--a civil case--and remanded that case for reconsideration in light of Hart, meaning the SCT believed Hart might impact that civil case. Second, the Dogwood majority said that Hart involved a dismissal on the COA's own initiative, whereas in Dogwood the appellee filed a motion to dismiss the appeal. But why does this matter? It may not really matter after all, since Judge Tyson, the author of Dogwood, dissented yesterday in McKinley and voted to dismiss that appeal even though, evidently, no motion to dismiss was filed there. Third, the Dogwood majority relied on the fact that the appellant didn't respond to the appellee's motion to dismiss. Fourth, the Dogwood majority said Hart involved a single violation, not multiple violations. True, but the Dogwood majority also held that each of the individual violations in Dogwood independently warranted dismissal, citing post-Viar COA cases for support, the same line of cases criticized by the SCT in Hart.
• By distinguishing Hart on the ground that the appellee in Hart didn't move to dismiss the appeal, the Dogwood majority suggests that the odds of dismissal are greater if the appellee files a motion to dismiss. This may further encourage what the COA's mistaken reading of Viar encouraged (likely the chagrin of the clerk's office): motions to dismiss based on rule violations. Query whether the COA should want to encourage parties or their counsel to file motions to dismiss appeals. This will burden the court (which must process and resolve the motions) and result in increased appellate litigation costs.
• The Dogwood majority rejected the notion that “when rules violations do not impede an evaluation of the case on the merits, the appropriate remedy should not be dismissal, but rather the imposition of monetary sanctions.” The majority said this same argument was rejected by the SCT in Viar. That's not so clear. Arguably, however, the SCT in Viar rejected that standard only in the context of a case where the COA creates an appeal for the appellant (namely by addressing arguments not advanced on appeal). As the SCT said last month in Hart, "In Viar, we [did not] state that the court may not review an appeal that violates the Rules, even when rules violations 'd[o] not impede comprehension of the issues on appeal or frustrate the appellate process.' [citation omitted] We simply noted that the Court of Appeals majority had justified its application of Rule 2 in Viar by using that phrase. Rather than approving this justification for applying Rule 2 to that scenario, we rejected it and dismissed the Viar appeal. In so doing, we held that the Court of Appeals improperly applied Rule 2 when it created an appeal for the appellant and addressed issues not raised or argued." (Emphasis added)
• What'll happen when yesterday's two cases get to the SCT? Because both decisions were exercises of discretion, the abuse of discretion standard of review would govern. Under that standard, if each case is viewed independently, each may be affirmed, resulting in the disparate treatment of two similarly situated appellants whose counsel committed the same rule violations. One received review on the merits, the other did not.
• These cases point up the folly of achieving uniformity among cases under a discretionary standard. So long as there's relatively unfettered discretion not to dismiss, different panels are free to reach differing results. It'll just depend on the panel. But there doesn't seem to be a way around this problem, unless the COA adopts a zero-tolerance approach and dismisses nearly all civil appeals with rules violations. That's not going to happen. And that's not good public policy. As Judge Hunter's Dogwood dissent observed, "[S]uch rigid uniformity in granting dismissals when violations occur can result in great damage to both parties and attorneys. Dismissal is a drastic remedy that not only cuts off the rights of parties to have their appeals heard and the possibility for parties to obtain relief, but also exposes the offending attorney to a malpractice suit even where the appeal, if heard, would not have been successful. In addition, many times these violations arise from the small-firm or solo practitioner who does not have a large appellate practice and thus is not as familiar with the rules of appellate procedure as an attorney at a larger firm; blanket dismissals for less serious rules violations will discourage those attorneys from bringing appeals and may result in their being forced to discontinue any appellate practice." (For similar observations about consequences, see the article I wrote with Judge Greene.)
• Judge Hunter's suggested approach--reconciling Rules 2, 25, and 34--may help alleviate the unfairness somewhat. His view appears to be that Rule 2 doesn't have to be invoked for the court to reach the merits because, so long as sanctions are imposed under Rules 25 and 34, the court is enforcing, and therefore is not "suspending," the rules. I'm not sure this approach works with assignments of error, however. Rule 10(a) says that "the scope of review on appeal is confined to a consideration of those assignments of error set out in the record on appeal in accordance with this Rule 10." And Rule 28(b)(6) says "Assignments of error not set out in the appellant's brief . . . will be taken as abandoned." It would seem, therefore, that even if a monetary sanction is imposed, the court would have to (per Rule 2) suspend or vary Rule 10(a) in order to address an assignment of error that doesn't accord with Rule 10. Likewise, even if a monetary sanction is imposed, it would seem that the court must suspend or vary Rule 28(b)(6) in order to address an assignment of error not referenced in the appellant's brief.
• In Dogwood the majority relied on the fact that the appellant didn't respond to the appellee's motion to dismiss and didn't move to correct the rule violations. As a practice pointer, I encourage appellants to move to correct any rule violations as soon as they are discovered. As Judge Hunter's Dogwood dissent advised, "In such situations [when the appellee points out the violation], the offending attorney's response should be to file a motion to amend his brief and correct those violations. Allowing these motions, if timely made and appropriate in changes, is in the interest of judicial economy as well as fairness. It also promotes the professional courtesy and collegiality this Court should be encouraging among members of the legal profession."

So Much For Uniformity: COA Issues Conflicting Decisions On Rule Violations

Yesterday the Court of Appeals (COA) issued its first decisions on appellate rules violations after last month's significant NC Supreme Court (SCT) decisions in State v. Hart and Walsh v. Town of Wrightsville Beach. The COA issued two cases, both split decisions. In one of the cases Judge Tyson's majority decision (joined by Judge Calabria) dismissed over Judge Hunter's dissent. In the other case Judge Jackson (joined by Judge Hunter) refused to dismiss a case over Judge Tyson's dissent. The rulings conflict with each other. For those who were optimistic that Hart and Walsh would usher in a more permissive attitude on the COA, that appears not to be the case, at least not with respect to some judges who continue to embrace what seems to be a zero-tolerance policy on rule violations.

Hart and Walsh

Last month, on May 4, the SCT issued its unanimous decision in State v. Hart. (For our post on Hart, see here.) The SCT in Hart reversed a COA decision which dismissed an appeal for a violation of the appellate rules. The SCT held that “every violation of the rules does not require dismissal of the appeal or the issue, although some other sanction may be appropriate, pursuant to Rule 25(b) or Rule 34 of the Rules of Appellate Procedure.” The SCT remanded to the COA "for consideration of whether to exercise such discretion and whether other sanctions should be imposed pursuant to appellate Rule 25(b) or Rule 34." Hart is a criminal case.

On the same day it handed down Hart, the SCT reversed the COA in Walsh v. Town of Wrightsville Beach, another case where the COA had dismissed the appeal for rules violations. The SCT remanded Walsh for reconsideration in light of Hart. Walsh is a civil case.

The COA's dismissal decisions in both Hart and Walsh were written by Judge Calabria. Judge Hunter dissented in both cases, arguing that dismissal was inappropriate. The cases got to the SCT based on Judge Hunter's dissents.

Yesterday's Decisions

Yesterday's two cases were both civil cases: Dogwood Dev. & Mgmt. Co. v. White Oak Transp. Co. and McKinley Bldg. Corp. v. Alvis. The same rule violations were present in both cases: the assignments of error in the record didn't include record or transcript reference cites; the briefs didn't properly refer to the assignments of error; and the briefs didn't comply with the briefing rules requiring a statement of the grounds for appellate review and a statement of the standard of review. Yet, despite the similar violations, the panels reached different results on whether the violations were sufficiently egregious to warrant dismissal (McKinley -- no; Dogwood -- yes).

So much for uniformity.

McKinley

In McKinley, Judge Jackson's majority opinion concluded that Hart "mandates a closer look at this Court's recent practice of dismissing numerous appeals," since "Hart explicitly states that dismissal is only one possible sanction for a violation of the Appellate Rules." The majority said dismissing the appeal "would be a step backward rather than the step forward that Hart asks us to take in applying the full range of sanctions available under the Appellate Rules rather than summarily dismissing many appeals. " Interestingly, the majority suggested it was not applying Rule 2--i.e., not suspending the rules--since it was, after all, sanctioning appellants' counsel for violating those rules, per Rules 25 and 34. (See discussion below of Judge Hunter's dissent in Dogwood.) The majority said that although Rule 2 must be applied cautiously, "Hart suggests no similar limitation on the application of Rules 25 and 34, and we see no reason to engraft any limitation beyond the language contained within the Rules at this time. Under Hart, clearly, it is appropriate to apply the other sanctions envisioned by these Rules liberally and to allow appeals to proceed."

Judge Tyson's dissent seized on Rule 2's narrow language (e.g., manifest injustice) and concluded that Rule 2 didn't rightly justify suspension of the rules. He deemed the violations "serious and egregious enough to warrant dismissal." He distinguished Hart on the basis that Hart was a criminal case with only a single rule violation.

Dogwood

In Dogwood, also a civil case and involving the same rule violations present in McKinley, Judge Tyson's views carried the day. His majority opinion concluded that the violations were egregious and warranted dismissal. The majority held that each of the four violations independently warranted dismissal. The majority declined to exercise discretion under Rule 2 to suspend the rules. The majority distinguished Hart on various grounds (see below).

Judge Hunter dissented. He believed monetary sanctions should be imposed in lieu of dismissal. He deemed the violations to be of a technical nature. He contended the court should weigh the severity and extent of those violations in choosing a sanction, and he suggested that the court should approach these matters by first considering lesser sanctions.

Interestingly, Judge Hunter suggested that Rule 2, with its narrow language, is not really an obstacle to reviewing the merits. Here's why. Rule 2, entitled "Suspension of rules," talks about suspending or varying the rules' requirements. But when a party is sanctioned with a monetary penalty per Rules 25 and 34 and the court proceeds to review the merits, the court is enforcing the rules, and thus the court is not suspending the rules per Rule 2. In other words, Judge Hunter suggests that the court may review the merits without invoking Rule 2 so long as the court otherwise sanctions the offending party per Rules 25 and 34.

COA To Counsel: Don't Try To Get 2 Bites At Appellate Apple

In Pineville Forest Homeowners Association v. Portrait Homes Construction Co., the COA sanctioned appellate counsel for raising the same issue twice.

In Pineville, the defendant had previously appealed and argued that a third-party warranty barred plaintiff's suit, mandated arbitration, and warranted dismissal. 175 N.C.App. 380 (2006). The court refused to address the third-party warranty issue as interlocutory.

However, the court addressed the arbitration issue, at least in the context of a Declaration of Covenants, Conditions, and Restrictions, also on the basis of which defendant argued arbitration was mandatory. The COA held that a substantial right was affected but that the trial court order's was too minimalist to review. The COA remanded for further proceedings as necessary and entry of a new order with findings and determinations regarding the arbitration provisions' validity and applicability.

On remand, the trial court followed the COA's directive and entered a new order regarding arbitration, which the defendant again appealed. In their second appeal, the defendant again raised the argument that a third-party warranty barred plaintiff's suit and mandated arbitration.

The COA held that the third-party warranty issue in Tuesday's Pineville was the same issue the COA had already held to be interlocutory and declined to review in the previous Pineville appeal--even though it was at least cast as going to the arbitration issue. The COA did not take kindly to what it saw as an attempt for a second bite at the appellate apple. The COA found the argument "offensive," and "caution[ed] Defendant's counsel that appellate practice is not sandlot baseball; absent prior judicial approval by either the grant of a motion for rehearing by the same Court, or the grant of a petition for consideration by a higher Court, there are no 'do overs.'" The Court sanctioned counsel under Appellate Rule 34, which allows the court to impose sanctions where "an appeal or any proceeding in an appeal was frivolous."

COA Balances Equities In Affirming Setting Aside Default

In Atkins v. Mortenson, the COA balanced the equities, rather than focusing on the defendant's diligence, in affirming the setting aside of an entry of default.

In Atkins, the defendant doctor, sued for malpractice, was served with process. He gave the materials to his office manager, who faxed the materials to the insurer. The insurer apparently did not receive the materials, no answer was filed, and default was entered. More than 30 days after an answer would have been due, the defendant filed an answer and made a motion to set aside the entry of default, which the trial court granted.

The COA noted that under the strikingly similar facts of Cabe v. Worley, 140 N.C. App. 250 (2000), it had refused to set aside entry of default, focusing there on the defendant's lack of attention to the suit. In Atkins, the defendant paid no more attention to the suit than did the Cabe defendant. Procedurally, though, the defendant in Cabe was fighting an uphill battle, trying to have the trial court's discretionary ruling against him reversed, whereas in Atkins, the trial court had ruled in favor of the defendant.

More interestingly, the Atkins court's focus, as opposed to that of the Cabe court, was decidedly not on the defendant's actions and inactions, which the Atkins Court viewed to be just one of several factors the court considers. Rather, the COA said it "must weigh defendant's diligence against any harm to plaintiff from the delay or injustice to defendant if he is not allowed to defend the case." The COA then focused on (1) the relative brevity of the delay (a little over a month), (2) the multi-million dollar judgment sought by plaintiff, (3) the potential damage to defendant's professional reputation, and (4) the defendant's meritorious defense to plaintiff's case, as demonstrated by summary judgment later granted in favor of defendant. Clearly factors for defense counsel to hit when seeking to set aside an entry of default.