Supreme Court Opinions

The North Carolina Supreme Court issued three opinions today, but they are not related to the subject matter of this blog. 

COA: Municipality must adopt or control sewer lines in order to be liable for failing to maintain them

Today, in Williams v. Devere Construction Co., Inc., a panel of the North Carolina Court of Appeals (Bryant, McGee, Beasley) ruled that in order to state a claim against a municipality for failure to maintain sewer lines, home owners had to show that the municipality adopted or controlled the lines.

In August 2009, a sewer line backed up and caused sewage to flow back through the sewer line connected to a house owned by plaintiffs Jonathan and Jamie Kaufman Williams. Sewage spilled out into the Williams home, causing substantial damage throughout the home. Subsequently, the Williamses filed a negligence claim against a number of defendants, including the City of Thomasville, alleging that the City was "involved in the process of construction of the sewer system" for a new Randolph County school "in preparation for taking over operation and control of said sewer system."

The Court of Appeals held that the Williamses failed to state a claim against the City. In order to make out a case of negligence against the City, the Williamses had to show that the City had breached a duty of care. A municipality like the City can be liable for failing to maintain sewer lines constructed by someone else only when the municipality adopts those sewer lines as part of its sewer system or when the municipality assumes control and management of the sewer lines. In other words, where a municipality does not control the sewer lines, the municipality is not liable. Since the Williamses only alleged that the City was preparing to take control of the sewer system--not that the City actually controlled the sewer system--the Williamses had not alleged any facts showing that the City had any duty of care.

Related links: Record on appeal; Williamses' brief; City's brief.

COA Opinions

Today the North Carolina Court of Appeals issued 34 opinions.  We will post on any cases of note later.

COA: Statute of limitations runs from date of alleged fraud or when fraud should have been discovered

Yesterday, in Stunzi v. Medlin Motors, Inc., a panel of the North Carolina Court of Appeals (Stroud, Calabria, Hunter Jr.) ruled that the statutes of limitations on a car buyer's claims against a dealership that sold him a lemon began to run on the date the buyer signed a disclosure stating that the car didn't conform to the manufacturer's warranty.

Plaintiff Stunzi purchased a car from defendant Medlin Motors, Inc. About a week after Stunzi picked up the car, a Medlin representative informed him that he had a paper for him to sign stating that some work had been done on the vehicle. Stunzi met with the representative and signed the one-page disclosure form, which clearly stated that the vehicle had not conformed to the manufacturer's warranty and that repairs had been made. Years later, when Stunzi made his last payment and received the title, he saw that the title said that the vehicle had been branded a "lemon." Stunzi sued Medlin, claiming Medlin willfully withheld the lemon classification in order to induce him to purchase the vehicle, and had misrepresented the nature of the document he signed after the sale.

The Court of Appeals held that Stunzi's claims were barred by the applicable statutes of limitations. The statutes of limitations began to run from the date of discovery of the fraud or when the fraud should have been discovered. For Stunzi, this meant that the clock started when he signed the disclosure form, which, had he read it, would have informed him that the vehicle was a lemon. Stunzi had a duty to read the form, and absent any showing that he was willfully misled or misinformed by Medlin as to the document's contents, Stunzi was held to have signed the document with full knowledge and assent.

Related links: Record on appeal; Stunzi's brief; Medlin's brief.

COA Upholds Forum Selection Clause

Yesterday the Court of Appeals held that a party cannot avoid enforcement of a forum selection clause requiring all disputes to be brought in Illinois where the last party to sign the contract signed in Illinois, even though the contract contained a provision stating that it became effective when money was received, and that money was received in North Carolina. The case is Parson v. Oasis Legal Finance, LLC, et al.

Plaintiff Parson entered into a contract with Oasis for an advance of funds to pay Parson's legal fees. The contract's forum selection clause required that the Circuit Court of Cook County, Illinois was the exclusive forum for all disputes, as well as a choice of law provision that North Carolina law would apply. In exchange for Oasis' payment of the fees, Parson agreed that if he won his personal injury lawsuit he would repay the amount advanced by Oasis plus an additional amount. The contract also provided that it was not effective until Parson received that advance (Parson lived in NC and received the payment there). Parson sued Oasis and two of its officers in North Carolina, alleging various claims arising out of the contract, including usury and unfair and deceptive trade practices.

The COA held that Parson's suit should have been brought in the forum provided for in the contract. Parson apparently argued that the forum selection clause was void against public policy and was unfair and unreasonable. The Court first reasoned that the contract was formed in Illinois because Parson, along with his attorney, signed the contract first in NC, then Oasis mailed the advance to Parson, and then an Oasis representative signed the contract in Illinois. The COA concluded that "the last act essential to establishing a meeting of the minds and affirming the mutual assent of both parties" was the signing of the contract by Oasis, and thus the contract was formed in Illinois. The Court noted that because the contract was formed in Illinois, the forum selection clause was not void against public policy under N.C. Gen. Stat. § 22B-3 (which says that any contract entered into in North Carolina that requires disputes arising out of the contract to be brought in another state is void and unenforceable).

The COA also found that enforcement of the forum selection clause would not be unfair or unreasonable because Parson claimed there was only a small amount of money at issue (Parson said about $3500, but he brought the suit in Superior Court) or due to Parson's "limited means" to litigate in Illinois. The Court concluded that Parson had not met the “heavy burden" required to avoid enforcement of the forum selection clause.

COA Opinions

The North Carolina Court of Appeals issued 32 opinions today.  We will post about any cases of interest later.