COA Opinions (11/15/11)

Today the Court of Appeals issued 21 opinions.  We will post on any cases of interest later.

Matching Funds Provision of Judicial Campaign Financing Program May Be Repealed

We previously mentioned that North Carolina Right to Life PAC filed a lawsuit seeking to have North Carolina's system of providing matching funds to judicial candidates who participate in public financing declared unconstitutional.  A recent filing by the State of North Carolina indicates that the case may come to an end much sooner than anyone anticipated. 
Read more »

Supreme Court: Note Holder Need Not Present Original Note In Foreclosure Proceedings

Yesterday the Supreme Court affirmed the Court of Appeals' holding that a lender does not need to present the original note to show that it is the note holder where the borrower plaintiff presents no evidence to the contrary. The case is Dobson v. Substitute Trustee Services, et al.

In the Court of Appeals case, Plaintiff Dobson executed a promissory note in favor of Equivantage which provided that Dobson would be in default under the note if she failed to make monthly loan payments. Dobson also executed a deed of trust on her property to secure the note. Equivantage assigned the note and deed of trust to Defendant Wells Fargo. Dobson defaulted, and Wells Fargo bean foreclosure proceedings.

Dobson filed suit against Wells Fargo and other defendants, seeking an injunction to stop foreclosure. Wells presented two affidavits from its employees and a copy of the note and the assignment of the note to show that it was the note holder and had a right to foreclose. Dobson claimed that Wells had not proven that it was the holder of the note because it failed to produce the original note. The trial court granted Dobson's motion for summary judgment by enjoining defendants from foreclosing on Dobson's property until Wells could establish that it was the holder of the note.

The Supreme Court affirmed the COA's reversal of the trial court's ruling. The COA noted that Dobson presented no evidence to dispute that Wells was the note holder. Dobson's assertion that she could not confirm that the copy of the note presented by Wells was a true and correct copy of the original was "insufficient to cast doubt on Defendants' evidence that Wells Fargo is the holder of the note and does not serve as evidence that the copies are not exact reproductions." The COA qualified this holding by noting that it "should be viewed in the context of summary judgment," and the trial court could ultimately conclude that Defendants' evidence regarding Wells' status as holder of the note was unconvincing at some point after the summary judgment stage.

Supreme Court Opinions (11/10/11)

On Thursday, November 10, 2011, the Supreme Court issued three opinions:

• In State v. Yencer, the Supreme Court held that an arrest by the Davidson College campus police force, pursuant to North Carolina's Campus Police Act, did not violate the First Amendment to the United States Constitution.
• In Amward Homes v. Town of Cary, an equally divided Supreme Court affirmed the Court of Appeals' opinion which held that local governments do not have the authority to impose a fee on residential builders to fund the construction of local schools without explicitly authority from the General Assembly.  Justice Barbara Jackson did not take part in the consideration or deliberation of the case.  While the opinion does not provide the reason for Justice Jackson's recusal, it is most likely because she wrote a dissenting opinion in the Court of Appeals opinion that was under review by the Supreme Court.  Womble Carlyle represented the Town of Cary in this matter.
• Finally, in Dobson v. Substitute Trustee Services, Inc., the Supreme Court issued a per curiam opinion affirming the Court of Appeals' decision dealing with the evidence that is necessary to establish that a financial institution is the holder of a promissory note and the amount owed by a debtor in a foreclosure proceeding. A more detailed post on this one is forthcoming.

While the Supreme Court has not indicated when it will issue its next set of opinions, the Court's practice over the last few years would indicate that there will be one more set of opinions released in December.  While you await this year's final set of opinions, take some time to review our post on which justices have authored opinions this year.

COA: Party Who Allegedly Made Warranties and Provided Maintenance on Equipment Not Liable to Equipment Lessee

Today the COA held that a lesee of equipment cannot bring claims against a party who provided maintence on that equipment and allegedly made warranties about the equipment, where that party was not mentioned in the equipment lease and did not actually supply the equipment. The case is Moore Printing, Inc. v. Automated Print Solutions, LLC.

Defendant APS performed a demonstration of the printer for Plaintiff Moore Printing and submitted a proposal for the lease and maintenance of the printer. Moore did not end up leasing the printer from APS, even though Moore's president signed the proposed lease that APS presented to Moore. Moore unltimately executed a different lease with Wells Fargo Financial Leasing, under which Wells Fargo would lease the printer to Moore and Network Data Systems would be the supplier of the printer. APS was not mentioned in the Wells Fargo lease agreement, and Moore entered into a separate maintenance agreement for the printer with APS. The lease between Wells Fargo and Moore stated that Moore “may be entitled to the promises and warranties (if any) provided to [Wells Fargo] by the Supplier,” and that Wells Fargo “transfer[red] to [Moore] all automatically transferable warranties, if any, made to [Wells Fargo] by the Supplier.”

Moore began having problems with the printer, and pursuant to the maintenance contract, APS attempted to resolve the problems, but was ultimately unable to do so to Moore's satisfaction. Moore sued APS for breach of contract, breach of fitness for a particular purpose, conversion, and unfair and deceptive trade practices. Moore also sought rescission of the lease agreement and quantum meruit, alleging that APS made certain warranties related to the printer.

The COA held that because the Wells Fargo lease was only signed by Moore's president and not APS, it was insufficient to form an enforceable lease between Moore and APS. The COA further held that the Wells lease did not establish privity of contract between Moore and APS. The Court noted that a lessee and a supplier/seller can be in privity of contract with the lessor, and the lessee could try to prove that the equipment seller’s representations and warranties made to the lessor were part of the inducement to enter into the lease. However, this is only true where the equipment lease directs the lessee to seek relief exclusively from the supplier/seller of the equipment and identifies the supplier/seller by name, and the supplier/seller is a party to the suit for breach of warranty. In this case, the Wells lease agreement specified that Network Data Systems was the supplier/seller of the printer, not APS, and APS was not mentioned anywhere in the Wells lease. It is unclear why, but Moore did not bring suit against Network Data Systems. Recission of the lease was also not proper because the parties to the lease agreement were Moore and Wells Fargo, and Wells was not a party to the suit.

COA Opinions for November 1, 2011

Today the COA published 15 opinions, seven of them civil. We will post on relevant cases shortly.