BLOGS: North Carolina Appellate Blog

Enter your Email

Preview | Powered by FeedBlitz

Powered by Blogger
Add to Technorati Favorites

Sunday, December 30, 2007, 8:59 PM

Fourth Circuit Issues Split Decision Enforcing Subpoena Against Foreign Company

In a controversial ruling Thursday in a case of first impression, the Fourth Circuit upheld a subpoena against a foreign company that has no U.S. employees, locations, or business activities, compelling the company to produce a witness to testify at a Rule 30(b)(6) deposition. The subpoena was issued pursuant to 35 U.S.C. 24, which permits a subpoena of a witness "residing or being within" the district. The case is Rosenruist-Gestao v. Virgin Enterprises Ltd., and the decision drew an exceedingly lengthy dissent from Judge Wilkinson, longer than the majority's decision.

The case concerns a challenge to a foreign company's registration of a trademark. The foreign company (defendant) refused to appear voluntarily for a Rule 30(b)(6) deposition, so the plaintiff sought a subpoena from the district court under 35 U.S.C. 24, which says that, where testimony is to be taken in a contested case before the Patent and Trademark Office (PTO), the district court clerk "shall, upon the application of any party thereto, issue a subpoena for any witness residing or being within such district, commanding him to appear and testify . . . ."

In this case, the Fourth Circuit majority held that the subpoena must be enforced.

First, the majority held that the statutory issue wasn't properly before the Court because, even though the district court's judgment favored the defendant by refusing to enforce the subpoena, the defendant didn't cross-appeal the district court's earlier conclusion that 35 U.S.C. 24 permitted the subpoena. As Judge Wilkinson complained in dissent, this holding seems to ignore the fact that an appellate court sits to review judgments, not the reasons underlying the judgments.

Second, after concluding that the issue wasn't properly before it, the majority dropped a footnote of what appears to be dicta, adding this single conclusory sentence: "Were the issue before us, however, we would conclude that [defendant's] activities in this case were sufficient to qualify it as 'being within [the] district.'" It's unclear what activities the majority was referring to. It could be the simply fact that the defendant sought to register a trademark. For the only contacts the defendant had with the district, it appears, are the de minimis contacts from the act of filing for trademark registration.

Judge Wilkinson's dissent began with this introduction (citations omitted): "In a first for any federal court, my colleagues hold that a foreign company that has no United States employees, locations, or business activities must produce a designee to testify at a deposition in the Eastern District of Virginia so long as it has applied for trademark registration with a government office located there. As a result, foreign witnesses can be compelled to travel to the United States and give in-person deposition testimony at the behest of any litigant in a trademark dispute, 'for use in any contested case in the Patent and Trademark Office' (“PTO”)-though the PTO's own procedures call for obtaining testimony from foreign companies through other means. The majority's holding that this subpoena is enforceable is problematic for many reasons. It fails to properly apply the statute, 35 U.S.C. § 24, that is directly relevant to its decision, and it reaches a result that is bound to embroil foreign trademark applicants in lengthy, procedurally complex proceedings. It inverts longstanding canons of construction that seek to protect against international discord, and it disregards the views of the PTO whose proceedings 35 U.S.C. § 24 is designed to aid. . . . [T]he majority creates a standard that is in fact a national one: the PTO is located in the Eastern District of Virginia; applications for trademark registration are filed there; and subpoena enforcement will frequently be sought in that district. Indeed, for any foreign corporation without a pre-existing United States presence, the majority's decision will be controlling."

Judge Wilkinson concluded that the majority decision risks international discord and tension "by enabling litigants to compel in-person depositions from foreign companies with the most minimal U .S. contacts, as a condition of those companies obtaining a legal protection that is critical to international commerce." He worries that the majority's decision invites retaliatory actions by foreign nations: "[T]he new burden that the majority places upon foreign companies to give in-person depositions in our country simply because they filed for registration of their trademark . . . risks just such retributive measures. It is simply unrealistic to suppose that other nations will sit quietly while their own companies and citizens are subjected to depositions in this country. It is thoroughly realistic to anticipate their imposing corresponding burdens and inconveniences upon Americans who seek trademark protection for their own activities abroad."

Fourth Circuit Limits Noneconomic Damages

Last Thursday, in Sloane v. Equifax Info. Serv., LLC, the Fourth Circuit vacated a judgment awarding $245,000 in noneconomic damages to the plaintiff in a Fair Credit Reporting Act (FCRA) case. The Court reduced the award to $150,000 and granted a new trial nisi remittitur. The case is significant, because it likely will be viewed as imposing an outer limit of $150,000 for noneconomic damages in FCRA and similar cases.

The Fourth Circuit has long warned that emotional distress is fraught with vagueness and speculation and is easily susceptible to fictitious and trivial claims. For this reason, a plaintiff must reasonably and sufficiently explain the circumstances of the injury with demonstrable emotional distress, and not resort to mere conclusory statements. The factors properly considered in determining potential excessiveness of an award for emotional distress including: the factual context in which the emotional distress arose; evidence corroborating the testimony of the plaintiff; the nexus between the conduct of the defendant and the emotional distress; the degree of such mental distress; mitigating circumstances; physical injuries suffered due to the emotional distress; medical attention resulting from the emotional duress; psychiatric or psychological treatment; and the loss of income, if any.

In this case, the plaintiff had her identity stolen, and the thief racked up tens of thousands of dollars of debt in plaintiff's name. Despite repeated requests by plaintiff, Equifax failed to correct her credit report, and despite the passage of a substantial period of time (21 months), Equifax left the matter uncorrected, resulting in a disastrous credit rating. Aside from injuries arising from plaintiff's inability to obtain credit over a substantial period of time, the distress caused insomnia and the deterioration of plaintiff's marriage. The jury awarded her $106,000 for economic loss and $245,000 for mental anguish.

On appeal, Equifax didn't deny that plaintiff suffered emotional distress for which some damages were appropriate. Rather, Equifax challenged the amount of noneconomic damages.

The Court agreed that, in evaluating whether an award of damages for emotional distress is excessive under Rule 59(a), a comparative analysis of similar cases is warranted. The Court observed, however, that finding helpful precedent for comparison is not a simple task. The Court cited a few recent FCRA cases, and found that approved awards typically range from $20,000 to $75,000 (with one outlier case from the Sixth Circuit approving a $400,000 award). But while the Court deemed these cases helpful, it found that they differed from the case before the Court because the plaintiffs in those cases suffered from isolated or accidental reporting errors, whereas the plaintiff here, a victim of identify theft, suffered systematic manipulation of her personal information; although Equifax wasn't responsible for the identity theft, it failed to correct the credit report over a protracted period of time.

The Court ultimately concluded that "considering the extensive corroboration offered at trial concerning the many months of emotional distress, mental anguish, and humiliation suffered by [plaintiff], we believe that the evidence does support an award in the maximum amount of $150,000." Even though "this amount is appreciably more than that awarded for emotional distress in most other FCRA cases," the Court deemed this case more severe than the typical FCRA case.

This case is significant in two respects. First, it confirms that, in the context of a Rule 59(a) excessiveness challenge, a comparative analysis is appropriate. A defendant's task is to identify comparable cases based on the type of conduct and injury and to determine the present value of the range of awards in those cases. Second, given the Court's assessment that this case is more severe than the typical FCRA case and the fact that a comparative analysis will be used in future cases, it seems likely that this case will be viewed by courts in this Circuit as imposing an outer limit for emotional distress damages in FCRA and similar cases.

Wednesday, December 19, 2007, 12:35 AM

COA Warns Lawyers And Judges Not To Submit/Sign Orders On Lawyers' Stationery

In a case today written by Judge Steelman, the COA again warned lawyers not to submit orders to trial judges on the lawyers' stationary, and it warned judges not to sign such orders: "We note that Judge Webb's order was printed, signed and filed on the ruled stationery of Habitat's trial attorney. Without deciding whether this practice violates either the Code of Judicial Conduct or the Revised Rules of Professional Conduct, we strongly discourage lawyers from submitting or judges from signing orders printed on attorneys' ruled stationery bearing the name of the law firm. Such orders could call into question the impartiality of the trial court." Two months ago the COA sounded a similar warning in another decision by Judge Steelman: "We strongly discourage judges from signing orders prepared on stationery bearing the name of any law firm."

Federal Standing Requirements In NC

For the past decade or so the NC Court of Appeals (COA) has been (much to my satisfaction) citing federal law on standing, with one of the most cited COA cases being Neuse River Found., Inc. v. Smithfield Foods, Inc., 574 S.E.2d 48 (2002), which quoted Justice Scalia's landmark opinion for the Court in Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992).

But one year ago this week, in its big taxpayer-standing decision in Goldston v. State, the NC Supreme Court distanced itself from the federal standing doctrine, holding that the COA's reliance on Defenders of Wildlife was "misplaced," particularly the federal requirement of an "injury in fact" that is "concrete and particularized." Goldston said:

"We observe that, in finding plaintiffs lack standing to bring their claims against the Governor and the General Assembly, the Court of Appeals relied upon federal standing doctrine. Goldston, 173 N.C.App. 416 passim, 618 S.E.2d 785 passim (citing Neuse River Found., Inc. v. Smithfield Foods, Inc., 155 N.C.App. 110, 574 S.E.2d 48 (2002)) (citing Lujan v. Defenders of Wildlife, 504 U.S. 555, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992)).... This reliance was misplaced. While federal standing doctrine can be instructive as to general principles . . . and for comparative analysis, the nuts and bolts of North Carolina standing doctrine are not coincident with federal standing doctrine. Compare Piedmont Canteen Serv., Inc. v. Johnson, 256 N.C. 155, 166, 123 S.E.2d 582, 589 (1962) (“Only those persons may call into question the validity of a statute who have been injuriously affected thereby in their persons, property or constitutional rights.” (emphasis added)), with Lujan v. Defenders of Wildlife, 504 U.S. at 560, 112 S.Ct. at 2136, 119 L.Ed.2d at 364 (noting that one of the three elements of federal standing is an “ ‘injury in fact’ ” that is “concrete and particularized”).

Interestingly, in today's decision in Meadows v. Iredell County, the COA cited Neuse River and Defenders of Wildlife and in particular the requirement for standing of an "injury in fact" that is "concrete and particularized." The COA did the same thing five months ago in Strates Shows, Inc. v. Amusements of America, Inc. But I wouldn't read these decision as bucking Goldston.

Tuesday, December 18, 2007, 10:51 PM

Court of Appeals Declines To Dismiss Appeals Despite Rules Violations

In the continuing saga over whether to dismiss appeals for rule violations, several opinions of note were written today by Judge Jackson. It's obvious that the Supreme Court's recent decision in State v. Hart is having somewhat of an impact.

1. Meadows: Omission Of Statement Of Standard Of Review Is Not Grounds For Dismissal; Rule 2 Doesn't Have To Be Invoked

In Meadows v. Iredell County, a published decision, the appellants, who were appealing a Rule 12(b)(6) order, violated Appellate Rule 28(b) by failing to include in their brief a statement of the standard of review. In a decision written by Judge Jackson and joined by Judges Tyson and Stroud, the Court cited the Hart for the proposition that "every violation of the rules does not require dismissal; sanctions pursuant to Rules 25(b) or 34 may be appropriate." The Court, however, didn't even impose sanctions; instead the court "elect[ed] to admonish plaintiff's counsel to exercise more diligence in preparing briefs for this Court."

There was no mention of Rule 2.

In some pre-Hart decisions some panels had dismissed appeals or declined to review issues that were lacking a statement of the standard of review. As Judge Tyson stated in dissent just six months ago in Peverall v. County of Alamance: "In Stann v. Levine, this Court dismissed the appeal in part because the appellant failed to state an applicable standard of review. --- N.C.App. ----, ----, 636 S.E.2d 214, 216 (2006). Also, in State v. Summers, this Court dismissed one of the appellant's arguments because of his failure to include a statement of the applicable standard of review. 177 N.C.App. 691, 700, 629 S.E.2d 902, 908, appeal dismissed and disc. rev. denied, 360 N.C. 653, 637 S.E.2d 192 (2006). Plaintiff's failure to adequately state the applicable standard of review for the question presented violates Appellate Rule 28(b)(6) and warrants dismissal of his appeal.") (emphasis added). And, in a separate decision six months ago and authored by Judge Tyson, the Court said: Defendant's failure to state the applicable standard of review for each question presented violates Appellate Rule 28(b)(6) and warrants dismissal of its appeal. " Dogwood Dev. & Mgmt. Co. v. White Oak Transport Co. (filed 6/5/07).

2. Rogers: Omission Of Statement Of Grounds For Appellate Review Is Not Grounds For Dismissal; Rule 2 Doesn't Have To Be Invoked

In an unpublished opinion today in Rogers v. Life Partners, Inc., the appellants violated Rule 28(b) by failing to include in their brief a statement of the grounds for appellate review. The Court, in an opinion by Judge Jackson and joined by Judges Tyson and Arrowood, held that the violation was "not so egregious as to warrant dismissal," and the Court elected instead to impose a sanction under Rule 34(b), ordering the appellant's counsel to pay the printing costs of the appeal. Now, the grounds for appellate review were fairly obvious, since the plaintiffs were appealing an order granting summary judgment to the defendants. But this decision can be read more broadly to mean that the omission of the statement of grounds for appellate review is not an "egregious" violation warranting dismissal.

Notably, like the Meadows case discussed above, the Court did not purport to invoke Rule 2 to suspend the rules; it deemed Rule 34 the proper vehicle for handling the violation.

This again shows the impact of Hart. Indeed, in a pre-Hart decision by Judge Jackson last year, the Court of Appeals held that the statement of grounds for appellate review (required by Rule 28(b)) is a "significant section" the omission of which renders the appeal "not properly before this Court," unless the court "suspends" Rule 28(b) by invoking Rule 2. See State v. Locklear (filed 11/7/06). And six months ago, in a decision by Judge Tyson, the Court said: "Defendant's failure to state the grounds for appellate review violates Appellate Rule 28(b)(4) and warrants dismissal of its appeal." Dogwood Dev. & Mgmt. Co. v. White Oak Transport Co. (filed 6/5/07) (emphasis added).

3. Judge Jackson's Concurring Opinion In State v. Spencer: Rule 2 Doesn't Need To Be Invoked Before The Court May Review The Merits Of An Appeal Upon Finding A Rule Violation

In a third case today which featured the same panel as Meadows above, the appellant (a criminal defendant) raised on appeal an issue for which he failed to assign error: that he couldn't lawfully be convicted both for larceny and possession of the same stolen property. Judge Tyson's majority decision invoked Rule 2 to "suspend" the rules -- i.e., to "suspend" Rule 10(a) which limits the scope of review on appeal to those assignments of error set out in the record) to prevent a manifest injustice (Rule 2 allows suspension to avoid a "manifest injustice").

Judge Jackson concurred by separate opinion to emphasize that "while not all Appellate Rules violations warrant dismissal, neither do they all require a determination of whether to invoke Rule 2." What Judge Jackson is alluding to, I take it, is that the focus on Rule 2 in many rule violation cases is misplaced. With respect to most rule violations, Rule 2 doesn't need to be invoked and satisfied before the Court may review the merits of the appeal; the Court may issue a lesser sanction than dismissal (such as an award of costs) under Rules 25 and 34. For when the Court, upon finding a rule violation, issues a sanction under Rules 25 or 34--including a sanction less drastic than dismissal, such as an award of costs--the Court is enforcing the rules and is not suspending them. Very few rules require suspension under Rule 2 before the Court may review the merits when confronted with a violation. One such rule is Rule 10 relating to assignments of error: Rule 10 says that the scope of review is limited to those assignments of error set out in the record; thus, Rule 1o must be suspended (by invoking Rule 2) if the Court wishes to review an issue to which the appellant did not assign error in the record. But the same cannot be said with respect to most other rule violations. Thus, as Judge Jackson explained in her special concurrence in Spencer today:

In State v. Hart, 361 N.C. 309, 644 S.E.2d 201 (2007), our Supreme Court reminded this Court 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.” Id. at 311, 644 S.E.2d at 202 (emphasis added). Therefore, when Rules violations are not so egregious as to warrant dismissal, sanctions “may be appropriate.” This leaves open the possibility that sanctions may not be appropriate when the violations are minor.
“[T]he exercise of Rule 2 was intended to be limited to occasions in which a 'fundamental purpose' of the appellate rules is at stake, which will necessarily be 'rare occasions.'” Id. at 316, 644 S.E.2d at 205 (citations omitted). “Rule 2 must be applied cautiously.” Id. at 315, 644 S.E.2d at 205. “Before exercising Rule 2 to prevent a manifest injustice, both [the Supreme] Court and the Court of Appeals must be cognizant of the appropriate circumstances in which the extraordinary step of suspending the operation of the appellate rules is a viable option.” Id. at 317, 644 S.E.2d at 206.
Because Rule 2 is an “extraordinary step,” I do not believe that it should be invoked every time there are Rules violations which fail to rise to the level of requiring dismissal. Just as sanctions may not be appropriate even for minor Rules violations, Rule 2 also may not be appropriate when the Rules violations are minor.
Since Hart, this Court has declined to dismiss an appeal and reached the merits of the case without invoking Rule 2 on several occasions. [Citing cases]
I would reserve the invocation of Rule 2 for those cases in which the very nature of the particular Appellate Rule violation requires its use. One example of such a violation is the one in the case sub judice. Here, if we were to decline to invoke Rule 2, there would be no assignment of error to address. [Emphasis added]

COA Confirms That Arbitrators Have Power To Award Interest Unless Parties Provide Otherwise In Their Arbitration Agreement

Today in Faison & Gillespie v. Lorant the Court of Appeals (COA) reversed a trial court's determination that a AAA arbitrator exceeded his powers by awarding interest. The COA held that, unless the parties provide otherwise in their arbitration agreement, an arbitrator may award interest as an element of the remedy, even where the claimant doesn't specifically pray for interest in his arbitration demand. Chief Judge Martin wrote the decision.

NC COA Decisions Today

The NC Court of Appeals released 36 published opinions today, of which 8 are criminal cases. More on these cases later.

Sunday, December 09, 2007, 7:35 PM

Supreme Court: Violation of Licensing Regulation Is Not Per Se Unfair/Deceptive Trade Practice

On Friday, in Walker v. Fleetwood Homes of N.C., Inc., the NC Supreme Court held that a judgment had to be vacated because it was based on the trial court’s erroneous conclusion that a violation of a licensing regulation is a per se unfair or deceptive trade practice.

By statute, it’s unlawful for any manufactured home manufacturer or dealer to conduct business without first obtaining a license. Another statute provides that a license may be denied, suspended, or revoked if a licensee uses “unfair methods of competition or commit[s] unfair or deceptive acts or practices.”

To implement the enabling statute, the relevant state agency (the Dept of Insurance) promulgated a regulation which delineates unfair methods of competition or unfair or deceptive commercial acts or practices that are used to deny, suspend, or revoke a licenses. These include “Failure to perform repairs, alterations and/or additions completely or in a workmanlike or competent manner,” and “Repeated failure to respond promptly to consumer complaints and inquiries.”

In Walker the jury was given special interrogatories that tracked the foregoing regulation. The jury was asked, “Did the defendant fail to perform repairs completely and in a workmanlike and competent manner?” and “Did the defendant repeatedly fail to respond promptly to the plaintiff’s complaints regarding the manufactured home?” The jury answered yes to both. So the trial court concluded that the defendant was liable under Chapter 75 (G.S. 75-1.1 and 75-16) for treble damages based on unfair/deceptive trade practices. The Court of Appeals affirmed.

The Supreme Court reversed in a unanimous opinion written by Justice Edmunds. (Justice Hudson didn’t participate, because she authored the Court of Appeals opinion under review.) After observing that violations of some statutes can constitute unfair and deceptive trade practices (UDTP) as a matter of law, the Court “decline[d] to hold that a violation of a licensing regulation is a UDTP as a matter of law.” The Court reasoned that because a violation of the enabling statutes in question (regarding licensure of manufactured homes manufacturers/dealers) wouldn’t constitute a UDTP as a matter of law, a violation of a regulation based on those statutes isn't necessarily a UDTP.

In a second significant holding, in response to a separate question on which the Court granted discretionary review, the Court held that the facts found by the Walker jury in response to the special interrogatories (that defendant (1) failed to perform repairs completely and in a workmanlike and competent manner, and (2) repeatedly failed to respond promptly to the plaintiff’s complaints regarding the manufactured home) were not sufficient to support a Chapter 75 violation. “On these limited findings of fact, the [trial] court had an insufficient basis on which to reach conclusions of law required under § 75-1.1 as to whether defendant’s actions were deceptive, immoral, unethical, oppressive, unscrupulous, or substantially injurious to consumers.” To be sure, the Court said that “a regulatory licensure violation may be evidence of a UDTP”; that violations of the regulations “are potentially relevant to any claim that defendant violated § 75-1.1”; and that the jury’s findings “in combination with other facts, might be sufficient to prove a UDTP claim.” But standing alone the jury's findings were not sufficient. This ruling confirms that claims that, at their core, are in the nature of warranty claims shouldn't be actionable under Chapter 75.

Finally, the Supreme Court held that one of the plaintiffs (Staten) had standing to bring a Chapter 75 claim even though she wasn't a purchaser of the mobile home. (The standing issue had drawn a dissent from Judge Jackson in the Court of Appeals.) Plaintiff Walker had purchased the mobile home for his daughter, Staten, pursuant to a "buy-for" arrangement. The Supreme Court held that even though Staten didn't purchase the mobile home, she nonetheless had standing under G.S. 75-16 to bring a UDTP claim, because she fell within the scope of G.S. 75-16, which provides a cause of action to "any person . . . injured" by a UDTP.

Friday, December 07, 2007, 2:47 PM

Today's Supreme Court Orders and Opinions

The NC Supreme Court issued orders and opinions today. Two cases were disposed of on the ground that review was improvidently allowed. In two other cases the Court (without opinion) was evenly divided (meaning the Court of Appeals decisions were affirmed without precedential value). Excluding a judicial censure case, that left 9 cases for decision. Most were per curiam affirmances without opinion. There were four opinions, two criminal, two civil. More on those cases later.

Tuesday, December 04, 2007, 3:42 PM

COA Reviews Costs Award, Despite Appellate Rules Violation

In Vaden v. Dombrowski, filed today, the COA affirmed the trial court's award of deposition, expert, and "reasonable and necessary" costs, noting that cost awards expressly allowed under the pertinent statute, N.C. Gen. Stat. sec. 7A-305, and the common law were permissible. The COA held, however, that neither the statute nor the common law allowed the court to award travel costs to mediation and therefore reversed as to that part of the cost award.

The COA also noted, as an initial matter, that the appellant had failed to include the standard of review for one of its arguments. The appellee argued for dismissal on that basis in its brief but not in a motion made pursuant to Appellate Rule 37. The COA held that "[a]s defendants have failed to file such a motion we chose to decide this appeal based upon its merits" and cited Appellate Rule 2 (which allows for the suspension of the rules, allowing the COA to reach the merits to prevent manifest injustice or expedite a decision in the public interest). Would the outcome have been different here if the appellee had filed a motion to dismiss? If so, why? It is also unclear how the appellee's failure to file a motion warrants a suspension of the rules per Rule 2, which is what the court seems to indicate, where Rule 2 mentions as grounds for suspension only manifest injustice and the public interest.

Split COA Affirms No Adverse Possession In Life Estate Case

In a split decision, the COA held today in Pegg v. Jones that the defendants didn't acquire title to Orange County land by adverse possession. The majority, authored by Judge Hunter, held that the trial court made sufficient findings to determine that the defendants' predecessors had a life estate and adversely possessed for at most the less than a year prior to being granted the life estate. And because the defendants didn't thereafter adversely possess for over 19 years to total the 20 years required for adverse possession, the defendants didn't acquire the land by adverse possession.

Judge Tyson, dissenting, would have remanded for further findings. Judge Tyson, who was on a panel that had previously remanded the case for further findings, didn't think the trial court had made the findings that the COA had previously demanded. Judge Tyson also took issue with the majority's failure to address out-of-state authority that a life estate doesn't necessarily toll or suspend an adverse possession. Judge Tyson stated that no prior NC case law addressed the issue but that "it seems clear that if the life tenant repudiates the life tenancy, ... he could adversely possess against the remainderman."

COA Holds Property Owners Lack Standing To Challenge Subdivision Ordinance

In Marriott v. Chatham County, the COA held today that adjacent landowners lacked standing to challenge a subdivision ordinance that didn't set criteria for when an environmental impact assessment is required.

In Marriott, Chatham County had a subdivision ordinance that allowed the county to require an environmental impact assessment if the county thought it was necessary for "responsible review." The ordinance didn't set forth criteria for when that might be -- a requirement under the ordinance's enabling statute, N.C. Gen. Stat. sec. 113A-8. Plaintiffs, adjacent landowners, sued and sought to have the courts force the county to establish criteria for when developers must submit an environmental impact assessment.

The COA, in an opinion authored by Judge Steelman, agreed with the trial court that the landowners lacked standing. The COA invoked separation of powers and said that the court couldn't order the County Commissioners, i.e., the local legislature, to change the ordinance and set the criteria.

Indeed, all the court could do, the COA noted, was invalidate the ordinance to the extent it was noncompliant with its enabling statute. Doing so wouldn't redress the plaintiffs' injuries, i.e., wouldn't establish the criteria. Therefore, redressability, a necessary element of standing, was missing, and dismissal of the landowners' suit was proper.

Split COA Cabins Negligent Misrepresentation On MLS Listing

In a split decision, Crawford v. Mintz, the NC COA today limited a plaintiff's ability to claim negligent misrepresentation on a Multiple Listing Service property listing, at least one that doesn't look exactly like what the seller, or seller's agent, posted to the MLS.

In Crawford, the property as originally listed by the seller's broker indicated the property was connected to the city sewer, when actually it had a septic tank. The listing also stated, though, that the listing's information was "reliable but not guaranteed."

After the plaintiffs bought the property, the septic tank leaked, and they wound up with raw sewage in their yard. Plaintiffs sued, among others, the seller's agents, who did business as Re/Max, for negligent misrepresentation.

The COA majority, written by Judge McGee, held that the plaintiffs couldn't show reliance on the alleged misrepresentation, a requisite element of negligent misrepresentation, where the plaintiffs hadn't relied on the defendants' version of the statement, which had included the qualifying "not guaranteed" language. In this case, plaintiffs had instead relied on a printout of the listing that did not include the defendants' qualification, and the trial court therefore should have granted the defendants' motion for directed verdict.

Judge Steelman disagreed and dissented. Judge Steelman noted that the Crawford majority relied on Raritan River Steel Co. v. Cherry, Bekaert & Holland, a case materially different from this case. Judge Steelman noted that in Raritan, the purported reliance was on Dunn & Bradstreet reports not only not from the defendant auditor but relying on the auditor's opinion of management's financial statements. Judge Steelman noted that such auditor opinions cannot be fully understood in isolation but rather only in the context of the auditor's entire report, with all qualifications and footnotes. Judge Steelman noted that in this case, the defendants' misstatement about the property's sewage can be understood in isolation and was undisputedly false. Therefore, regardless of the presence or absence of the defendants' qualification, there was enough there to send the negligent misrepresentation claim to the jury.

COA Decisions Today

The NC COA issued opinions today. Those included 9 published civil cases -- juvenile cases excluded -- with one dissent by Judge Steelman (in a tort case), one dissent by Judge Tyson (in a property case), and one concurrence with a separate opinion by Judge Hunter (in a tort / statute of limitations case). There were no major appellate rules cases. More on these cases soon...
back to top