North Carolina Appellate Blog

COA Opinions

2012-01-17T10:19:00.003-05:00

The Court of Appeals posted 29 opinions today, 16 of them civil. We'll be back to you shortly with posts on the relevant opinions.

COA: EMTs do not have public officer's immunity

2011-12-23T12:14:00.007-05:00

This week, a panel of the North Carolina Court of Appeals (Calabria, Martin, Bryant) held in Fraley v. Griffin that emergency medical technicians (EMTs) are not entitled to public officer's immunity and can be personally liable for claims brought against them.

In January 2010, after returning home from football practice, 17-year-old Atlas Fraley called 911 and reported that he was experiencing full body cramps and dehydration. His parents were at work at the time. Defendant James Griffin, an EMT, went to Atlas's home. Griffin conducted a brief examination of Atlas and determined his condition was not serious and that his pain was not severe. Defendant advised Atlas to orally hydrate and watched him do so successfully. Griffin then gave Atlas oral and written instructions to contact his parents and 911 if his symptoms worsened and left Atlas home alone. A few hours later, Atlas’s parents arrived home and found him lying on their living room. Orange County Emergency Services personnel responded and pronounced him dead. A cause of death could not be determined. Atlas's parents, as administrators of his estate, sued Griffin for wrongful death.

The issue before the Court was whether Griffin was entitled to public officer's immunity. In North Carolina, "public officers" are shielded from liability unless their actions are corrupt or malicious, whereas "public employees" can be held personally liable for mere negligence. In distinguishing between a public officer and a public employee, our courts have held that (1) a public office is a position created by the constitution or statutes; (2) a public official exercises a portion of the sovereign power; and (3) a public official exercises discretion, while public employees perform ministerial duties. Additionally, an officer is generally required to take an oath of office while an agent or employee is not required to do so.

Here, the Court determined that North Carolina statutes do not create the position of EMT. The Court also concluded that because EMTs are required to execute specific treatment protocol and cannot deviate from such protocol without physician approval, an EMT's duties are ministerial rather than discretionary. Therefore, the Court concluded, EMTs are not public officers, and Griffin could be liable in his individual capacity.

Related links: Record on appeal (vol. 1, vol. 2, vol. 3); Fraleys' brief; Griffin's brief; amicus brief (NC Advocates for Justice); amicus brief (NC Ass'n of Rescue and EMS and NC Ass'n of EMS Administrators).

COA Opinions Today

2011-12-20T12:05:00.002-05:00

Today the COA released 28 published opinions, 19 of them civil. We will report further on some of these cases shortly.

COA: Divorce under Islamic law is not a valid divorce in North Carolina

2011-12-12T21:03:00.009-05:00

Last week, a divided panel of the Court of Appeals (Calabria and Martin, majority; Bryant, dissenting) held in Mussa v. Palmer-Mussa that a woman's divorce pursuant to Islamic law was not a valid divorce under North Carolina law.

In 1997, Nikki Palmer-Mussa participated in a wedding ceremony with Khalil Braswell. The couple consented to become husband and wife, but they did not obtain a marriage license because they only sought to comply with Islamic marriage requirements. A friend of the couple, who was not an imam, conducted the ceremony. Afterward, the couple lived together in Maryland, but the marriage was never consummated. Palmer-Mussa divorced Braswell in the manner required by Islamic law by returning the dowry and declaring that she was divorced from her husband. At the time, she believed she was divorced since the marriage was entered into under Islamic law and ended under Islamic law. However, she never sought a judicial divorce or annulment.

Palmer-Mussa subsequently returned to North Carolina, where she met and married Juma Mussa in November 1997. During their marriage, the parties had three children, purchased property as husband and wife, and filed joint tax returns, and Palmer-Mussa was listed as Mussa's wife on his insurance policy. In 2008, Palmer-Mussa filed for divorce and was awarded child support, postseparation support, and attorney’s fees. Mussa later sought an annulment based on bigamy. He argued that his marriage was void from the start because Palmer-Mussa was still married to Braswell when she married Mussa.

The Court of Appeals held that because Palmer-Mussa and Braswell did not have a marriage license and the ceremony failed to meet statutory requirements, their marriage was merely voidable--not void. A voidable marriage is valid until a tribunal annuls the marriage in a direct proceeding, in contrast to a void marriage, which is a nullity and impeachable at any time. In North Carolina, the only type of marriage that is absolutley void is a bigamous marriage.

Although Palmer-Mussa claimed she and Braswell were divorced according to the laws of Islam, the Court held that under North Carolina law, there is no authority supporting the dissolution of a marriage by religious means that can be deemed to be the equivalent of a judicial determination regarding the validity of a marriage. Therefore, at the time of Palmer-Mussa's marriage to Mussa, she was still married to Braswell, rendering the marriage between Palmer-Mussa and Mussa bigamous and void.

Related links: Record on appeal; Mussa's brief; Palmer-Mussa's brief.

Supreme Court Opinions (12/9/11)

2011-12-09T14:14:00.001-05:00

Today the North Carolina Supreme Court released six opinions. This group of opinions is likely the last of the year. We will post on any decisions of interest later.

COA: Stamp Evidencing Transfer of Note Must Be Signed In Order to Be Effective

2011-12-06T16:04:00.008-05:00

In another foreclosure-related ruling issued by the COA today, the Court held that a stamp evidencing the transfer of a note must be signed by someone with authority to transfer it in order to be effective. The case is In re Bass.

Here the borrower claimed that the foreclosing party, U.S. Bank National Association, was not the legal holder of the Note and could thus not foreclose on her property. The Note was transferred several times before coming into the possession of U.S. Bank. The evidence of transfer of the Note between previous holders Mortgage Lenders and Emax Financial Group included a stamp but did not include a signature of an authorized representative transferring it. Emax then transferred the Note to Residential Funding Corporation, and Residential transferred it to U.S. Bank. All other stamps showing transfers of the Note between various parties bore handwritten signatures of the individuals with authority to effect the transfers.

The COA held that a stamp may constitute a valid indorsement of a note, but only if the stamp is executed by a person having the intent and authority to do so. U.S. Bank did not introduce any evidence to establish that the stamp purportedly indorsing and transferring the Note from Mortgage Lenders to Emax was an authorized signature. U.S. Bank introduced only the Note itself which bore a stamp stating "PAY TO THE ORDER OF: EMAX FINANCIAL GROUP, LLC, WITHOUT RECOURSE, BY: MORTGAGE LENDERS NETWORK USA, INC. This stamp was unsigned. The stamp itself did not count as a signature because the person placing the stamp must act with authorization and with the intent to indorse the instrument in order to effect a valid transfer. The stamp at issue only showed the name of Mortgage Lenders, but did not contain a countersignature indicating the capacity in which the signor acted in executing the stamp on behalf of Mortgage Lenders. The COA deemed the lack of signature evidencing of authority of an individual executing the stamp "a troublesome omission," and held that U.S. Bank had thus not presented sufficient evidence that it was the holder of the Note.

COA: Upon Merger, Surviving Bank Becomes Holder of Note By Operation of Law

2011-12-06T16:00:00.008-05:00

Today the COA held that when evidence is presented that a merger between two banks took place, the surviving bank succeeds by operation of law to the status of holder of the previous bank's note. The case is In re Carver Pond I.

This was a foreclosure case in which the borrower claimed that Bank of America was not the holder of the Note and thus had no power to foreclose. BoA had merged with LaSalle Bank, who was the previous holder of the Note.

BoA presented three documents to evidence the merger between it and LaSalle: an Affidavit executed by the loan servicer stating that BoA was successor by merger to LaSalle; a certified statement from the assistant secretary of BoA that the merger took place; and a letter from the Comptroller of the Currency Administrator of National Banks certifying that LaSalle merged with BoA. The COA held that these documents were sufficient evidence of the merger between LaSalle and BoA, and as the surviving corporation, BoA succeeded by operation of law as the holder of the Note, and had standing to enforce the Note in its own name.

COA Opinions (11/15/11)

2011-11-15T11:20:00.001-05:00

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

2011-11-14T14:00:00.005-05:00

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.

Today, the State of North Carolina filed its Second Motion for Extension of Time to respond to NC Right to Life PAC's Complaint. While the filing of such a motion is fairly routine, the State's reason for seeking an extension in this case is not.

According to the State's Motion, on July 21, 2011, Gary Bartlett, the Executive Director of the State Board of Elections wrote a letter to the John Locke Foundation stating that a matching funds provision utilized by the Town of Chapel Hill should not be implemented. Chapel Hill's matching funds provision was very similar to the one challenged by NC Right to Life PAC. The State Board of Elections subsequently removed the matching funds provisions from the Town of Chapel Hill's campaign finance guidelines.

Finally, and most importantly, the State reported that "Mr. Bartlett has met with leaders of the General Assembly and requested that the matching funds provision for the public financing of appellate judicial elections and the concomitant reporting requirements be repealed." The State indicated that it has "been informed by legislative leadership that repeal of the statutes will be take up at [the General Assembly's] November 27, 2011 session."

The repeal of the matching funds provision and the reporting requirements would most likely moot NC Right to Life PAC's case and deprive the Court of subject matter jurisdiction to hear the matter. While the case would end without a judgment in NC Right to Life PAC's favor, a complete repeal of the matching funds provision would be the functional equivalent of a victory on the merits.

The repeal of these provisions would also present serious questions regarding the viability of North Carolina's system of public financing for judicial elections. The public financing system, and the fundraising and spending restrictions that come with it, may seem less appealing to judicial candidates if they cannot receive the matching funds for money spent by privately financed opponents or third parties. It will be interesting to see how the General Assembly proceeds on the issue of repeal and what it does, if anything, to incentivize judicial candidates to participate in the public financing system in the absence of matching funds.

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

2011-11-11T14:59:00.012-05:00

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)

2011-11-10T13:03:00.000-05:00

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

2011-11-01T15:16:00.003-05:00

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

2011-11-01T13:14:00.000-05:00

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

NC Supreme Court Historical Society Annual Meeting

2011-10-23T09:26:00.000-05:00

An announcement that may be of interest to our readers:

The North Carolina Supreme Court Historical Society is holding its 20th Annual Meeting and Dinner on Thursday, October 27, 2011. The dinner will be at the Carolina Country Club, 2500 Glenwood Avenue, in Raleigh, North Carolina. The reception starts at 6:00 PM and dinner starts at 7:00 PM. The speaker will be Scott A. Miskimon of Smith Anderson. To register, go to this web page.

The NC Supreme Court Historical Society was established in 1991 for the purpose of preserving the legal heritage of North Carolina. The Society’s sole purpose is to collect and preserve the history of the court, including attorneys and others who interact with the judicial system, as well as the cases that may be generated from those interactions.

COA Opinions (10/18/11)

2011-10-19T14:22:00.002-05:00

Yesterday the COA posted 11 opinions, 5 of them civil. We will have more on any cases of note shortly.

Supreme Court Opinions (10/7/11)

2011-10-07T12:49:00.002-05:00

The North Carolina Supreme Court published 10 opinions today. We will post on any opinions of interest later.

COA Opinions (10/4/11)

2011-10-04T10:02:00.003-05:00

Today the Court of Appeals published 22 opinions. We will post on any decisions of note later.

North Carolina's Judicial Election Financing Challenged as Unconstitutional

2011-09-28T10:41:00.000-05:00

Earlier this month, North Carolina Right to Life Political Action Committee and North Carolina Right to Life Committee Fund for Independent Political Expenditures ("NC Right to Life Plaintiffs") filed suit in the United States District Court for the Eastern District of North Carolina seeking to have North Carolina's public financing system for judicial elections declared unconstitutional. Given the Supreme Court's holding last term in Arizona Free Enterprise Club's Freedom Club PAC v. Bennett, which declared a similar public financing to be unconstitutional, North Carolina's public financing system may be in jeopardy.

Candidates running for the North Carolina Court of Appeals or North Carolina Supreme Court have the option to participate in the North Carolina Public Campaign Fund. The Fund's stated purpose is "to ensure the fairness of democratic elections in North Carolina and to protect the constitutional rights of voters and candidates from the detrimental effects of increasingly large amounts of money being raised and spent to influence the outcome of elections, those effects being especially problematic in elections of the judiciary, since impartiality is uniquely important to the integrity and credibility of the courts." N.C. Gen. Stat. S 163-278.61.

Under this system, candidates for the Court of Appeals are given approximately $164,000 and candidates for the Supreme Court are given approximately $240,000 to conduct their campaigns. Candidates who participate in the Fund accept restrictions on their ability to raise money from sources other than the Fund. N.C. Gen. Stat. S 163-278.64(d).

The NC Right to Life plaintiffs are not challenging these provisions, but instead are challenging the portion of the law that allows the Fund to provide participating candidates with additional funds in response to expenditures by either a non-participating candidate or an independent expenditure group like the plaintiffs.

The law establishing the Fund contains a "matching funds trigger" that provides a dollar for dollar match for a participating candidate in response to funds spent in opposition to a participating candidate or in support of an opponent to a participating candidate. N.C. Gen. Stat. S 163-287.67. The matching funds trigger kicks in when the funds spent in opposition to a participating candidate or in support of an opponent to a participating candidate exceeds the amount that the participating candidate initially received from the Fund (i.e. $164,000 or $240,000).

The amount of funds spent in opposition to a participating candidate or in support of an opponent to a participating candidate is calculated by adding:

The greater of:

Campaign expenditures or obligations made, or funds raised or borrowed, whichever is greater, reported by a non-participating candidate who is running against a participating candidate; or
The amount that a participating candidate running against another participating candidate initially received from the Fund (i.e. $164,000 or $240,000).

The aggregate total of all expenditures and payments reported by third-parties making independent expenditures or electioneering communications in opposition to the participating candidate or in support of the opponent of the participating candidate.

In essence, if a non-participating candidate spends more than the amount that that the participating candidate was allotted by the Fund, the participating candidate will receive a dollar for dollar match from the Fund. Additionally, a publicly financed candidate will receive a dollar for dollar match for every dollar spent by third parties once the matching funds trigger is reached.

The NC Right to Life plaintiffs claim that they have refrained from making independent expenditures in support of judicial candidates and will not do so in the future out of fear that their contribution will trigger the matching funds provision and result in funds being given to a candidate whose views they disagree with. As a result, they claim, their First Amendment right to freedom has been violated.

Based upon the Supreme Court's holding in Arizona Free Enterprise Club's Freedom Club PAC v. Bennett this past June, the NC Right to Life plaintiffs may very well be right.

In Arizona Free Enterprise Club, the Supreme Court reviewed the constitutionality of a public financing system that was, in all material ways, identical to the Fund. In short, the Supreme Court held the system unconstitutional because the matching funds program required third parties who desired to make independent expenditures to choose between either (a) not engaging in speech at all; (b) modifying their message such that they did not advocate for or against a particular candidate; or (c) engaging in speech and thereby providing a candidate with an opposing viewpoint with additional funding. According to the Supreme Court, this choice "contravenes 'the fundamental rule of protection under the First Amendment, that a speaker has the autonomy to choose the content of his own message.'"

It is difficult to draw a meaningful distinction between the law that was struck down in Arizona Free Enterprise Club and North Carolina's public financing law. Both laws seem to require third parties and privately funded candidates to decide between either refraining from speaking or speaking and risking that their speech will trigger an award of funds to a candidate with an opposing viewpoint. Since North Carolina's law contains the same type of provisions that were found to be unconstitutional, it is likely that North Carolina's public financing system for judicial selection, or at least the matching funds provision, will be struck down.

The case is only in its nascent stages, so it is difficult to say what impact this case will have on the 2012 election for North Carolina's Court of Appeals and Supreme Court. Even if the case is resolved in an expeditious manner, it is unlikely to be decided until right before the 2012 general election. With the partisan balance of the North Carolina Supreme Court hinging on the outcome of the election, removing the restrictions on third party independent expenditures in the weeks leading up to the election could make for an interesting conclusion to the 2012 election season.

COA: Circumstances critical in determining whether right of first refusal is enforceable

2011-09-22T08:50:00.009-05:00

On Tuesday, in the case of Taylor v. Miller, a panel of the North Carolina Court of Appeals (Geer, Martin, Elmore) held that a right of first refusal in a deed may be enforceable even if it contains a fixed price option. In this decision, the Court recognized the need to enforce arms-length negotiations and the importance of rights of first refusal in certain contexts, such as real estate development and family law.

Mr. Taylor and Ms. Miller were married in 1982 and separated in 1993. In 1994, they executed a warranty deed to Mr. Taylor for a piece of property in Morehead City, North Carolina. The deed contained a provision regarding Ms. Miller's right to repurchase the land should Mr. Taylor decide to sell it. That provision stated, in part, that Ms. Miller could buy the property (1) on the same terms and conditions of a bona fide offer received by Mr. Taylor, or (2) for the sum of $41,500 plus the costs of repairs and improvements made since the execution of the deed. In 2009, Mr. Taylor and his current wife filed a complaint seeking a declaration of rights under the deed and a determination whether the right of first refusal provision was enforceable.

A right of first refusal requires that, before the designated property may be sold to another party, it must first be offered to the person that holds the right of first refusal. Although a right of first refusal is considered a restraint on alienation of property, which is generally disfavored by the courts, a right of first refusal is not void per se and will be enforced if it is reasonable. To determine whether a right of first refusal is reasonable, courts consider two primary factors: (1) the duration of the right, and (2) the provisions for determining the price of exercising the right.

The Taylors argued that the right of first refusal in this case was unenforceable because it failed to satisfy the second prong. Specifically, they contended that the right of first refusal was unreasonable because of the fixed price option ($41,500), which, they argued, did not link the price of the property to the fair market value of the land or to a price they would accept from another buyer.

The Court of Appeals explained that in considering the second prong, courts must look to the circumstances existing at the time the contract was made to determine whether the price is reasonable. Here, the record contained a letter from Mr. Taylor to Ms. Miller indicating that the deed was part of their separation agreement. According to the Court, if the fixed price option was a "bargained-for sum" arising out of Mr. Taylor and Ms. Miller's negotiations during their property division, then those circumstances could suggest that the fixed-price right of first refusal was reasonable. However, because genuine issues of fact existed, summary judgment was not proper for either party.

Related links: Record on appeal; Taylors' brief; Miller's brief; Taylors' reply brief.

COA Reverses Order Granting Summary Judgment Where Parties Offered Competing Affidavits

2011-09-21T21:32:00.002-05:00

Yesterday the Court of Appeals reversed a trial court's order granting summary judgment to defendant UPS, holding that competing affidavits submitted by the parties regarding whether plaintiff actually saw terms of service governing shipping and whether an oral contract was created were sufficient to create a genuine issue of material fact. The case is Marso v. United Parcel Service, Inc.

Marso sold a diamond ring and mailed it to the buyer via UPS. Marso claimed that the UPS Store employee told him that UPS would take cash from the purchaser; would hold on to the ring until Thompson delivered the cash; would collect cash only; that the collection was guaranteed, and that Marso would receive a check from UPS, not from the buyer. Marso paid UPS to ship the ring by COD, and Marso requested requested that UPS collect $12,145.00 for the ring upon delivery of the package to cover the purchase price and shipping costs. The shipment receipt provided to Marso said that the package was shipped “COD=$12,145.00, Guaranteed.”

When the package was delivered to the buyer, UPS collected what appeared to be a cashier's check, but Marso's bank refused to honor it and claimed it was a "bogus check of no value." Marso sued UPS for breach of contract.

The COA described the competing affidavits submitted by Marso and UPS. UPS submitted the affidavit of an employee that stated that each customer who ships packages from the store Marso shipped from had to use a computer program to enter shipping information and in doing so had to agree to the terms of service, which included a disclaimer that “UPS will not accept currency in any amount for payment of C.O.D. shipments,” and that the shipper accepts the risk for nonpayment and insufficient funds. In his affidavit Marso denied that he used a computer at the UPS store, and claimed that an employee entered the information in the computer for him and that he did not assent to the terms of service. Marso claimed that he formed an oral contract with the UPS employee that UPS would ship the ring and guaranteed receipt of a cash payment by the buyer.

The COA held that "the parties presented conflicting evidence in competing affidavits regarding the attendant circumstances of the formation and terms of the agreed-upon contract, including whether plaintiff had either actual or constructive notice that he would be bound by the terms of [service]." This was enough to create a genuine issue of material fact as to whether Marso actually saw the terms of service and whether he entered into an oral contract with the UPS employee.

COA Opinions (9/20/11)

2011-09-20T08:48:00.002-05:00

Today, the North Carolina Court of Appeals issued 15 published opinions. We will report on any decisions of interest later.

COA: Premises lessor not liable absent sufficient control over site

2011-09-07T14:09:00.009-05:00

A North Carolina Court of Appeals panel (Stroud, McGee, Beasley) ruled yesterday in Hylton v. Hanesbrands, Inc., that a premises lessor could not be liable for a plaintiff's injuries since the lessor did not have sufficient control over the site, and since the allegedly unsafe conditions were totally collateral to the work the lessee had agreed to perform. Womble Carlyle attorneys Reid C. Adams, Jr., Rachel E. Daly, and Jennifer B. Lyday represented Hanesbrands in this appeal.

James Hylton, an employee of Suez Energy, sued Hanesbrands, among other defendants, after he was injured in an accident at a steam plant Hanesbrands was leasing to Suez. Hylton was backing a front-end loader down a large sawdust pile when the loader overturned and rolled down the sawdust pile. Hylton claimed that there were lighting issues and problems which Hanesbrands failed to correct despite having had the ability to do so. He alleged that Hanesbrands was negligent in failing to maintain the property in a reasonably safe condition; failing to warn people of hidden, unsafe conditions; and failing to make reasonable inspections and to correct unsafe conditions.

In determining whether summary judgment for Hanesbrands was proper, the Court first considered the question of whether the terms of the lease agreement between Hanesbrands and Suez were sufficient to give Hanesbrands control over the condition that caused Hylton's injuries. Although Hylton pointed to several portions of the agreement which he argued showed that Hanesbrands retained sufficient control of the premises to establish a duty to him, the Court was not persuaded. The Court determined that even in the aggregate, those provisions showed that the agreement left to Suez the specifics of operating the steam plant. Furthermore, the Court noted, Hylton ignored other portions of the agreement which specifically showed that Suez was in exclusive control of safety issues.

Next, the Court considered whether the operation of heavy machinery at night without sufficient lighting was an inherently dangerous activity that would trigger a duty of care by Hanesbrands to Hylton. The Court observed that the agreement provided that Suez was acting as a subcontractor to provide steam for Hanesbrands's facility. Therefore, Suez made the decision as to how to provide steam, which included constructing large piles of sawdust in a particular location with poor lighting. As the Court explained, the nature of the sawdust piles and lighting were actions collateral to providing steam, and no recovery may be allowed for an injury resulting from an act or fault purely collateral to the work agreed upon and arising from a wrongful act of a subcontractor. For these reasons, the Court affirmed summary judgment for Hanesbrands.

Related links: Record on appeal; Hylton's brief; Hanesbrands's brief.

COA: "Loan Discount Fees" Are Not Interest Fees and Are Thus Not Preempted by Depository Institutions Deregulation and Monetary Control Act

2011-09-07T13:17:00.010-05:00

Yesterday the COA affirmed a trial court's holding that a state bank's charging of "loan discount fees" where no discount was actually given to borrowers was unfair and deceptive, and that this claim was not preempted by the federal Depository Institutions Deregulation and Monetary Control Act because loan discount fees were not usury fees. The case is Bumpers v. Community Bank of Northern Virgina.

Plaintiff borrowers took out a loan with the defendant bank and claimed that loan closing, origination, and underwriting fees they were charged were excessive, and that they were charged a loan discount fee for a loan that did not have a discounted interest rate.

The COA ruled on several issues appealed by the bank. First, the COA upheld the order for partial summary judgment on the issue of liability for UDTP, affirming the trial court's order that the bank's practice of charging a loan discount fee without providing a loan with a discounted interest rate was unfair and deceptive. The Court reasoned that the facts showed that the borrowers were "charged for a product [a loan discount] that was never delivered," and "this type of systematic overcharging constitutes" an UDTP.

The COA further held that the Depository Institutions Deregulation and Monetary Control Act(DIDA), a federal statute designed in part to preempt state law usury claims against out-of-state banks, did not exempt the bank from the borrowers' claim related to the loan discount fees. The COA reasoned that the borrowers' claims were not claims for usury, but were related to the charging of fraudulent discount rate fees where no discount was given, and under DIDA, “interest” does not broadly encompass any and all fees connected with a loan.

The COA also found that there was a genuine issue of material fact on the issue of whether the closing fees were excessive and thus constituted an UDTP. The COA based this finding on the testimony of the borrowers' certified real estate specialist testified that closing fees should not exceed $400 but could theoretically rise to $1500 based on an attorney's hourly rate. The fees charged to borrowers were around $1200, so a jury could determine that they were not excessive.

Supreme Court Opinions

2011-08-26T12:45:00.000-05:00

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

2011-08-16T16:13:00.008-05:00

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

2011-08-16T08:51:00.000-05:00

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

2011-08-03T15:46:00.011-05:00

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

2011-08-03T11:34:00.011-05:00

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

2011-08-02T07:49:00.000-05:00

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

Opinions by Supreme Court Justices During the 2011 Term

2011-07-22T10:43:00.000-05:00

As part of our continuing goal of keeping you up to date on what is going on in North Carolina's Appellate Courts, this post will catalog the opinions authored by each Justice. We will update this list as the year goes on.

Last updated on October 24, 2011

Chief Justice Sarah Parker
Majority Opinion Author

Concurring Opinion Author

Dissenting Opinion Author

Justice Mark Martin

Majority Opinion Author

Concurring Opinion Author

Dissenting Opinion Author

Justice Robert H. Edmunds, Jr.

Majority Opinion Author

Concurring Opinion Author

Dissenting Opinion Author

Justice Paul M. Newby

Majority Opinion Author

Concurring Opinion Author

Dissenting Opinion Author

Libertarian Party v. State

Justice Patricia Timmons-Goodson

Majority Opinion Author

Concurring Opinion Author

Dissenting Opinion Author

Justice Robin E. Hudson

Majority Opinion Author

Concurring Opinion Author

Dissenting Opinion Author

Justice Barbara Jackson

Majority Opinion Author

Concurring Opinion Author

Dissenting Opinion Author

Per Curiam Opinions

COA: Failure to Assert Right to Arbitration Until Trial Date Results in Waiver

2011-07-20T15:30:00.010-05:00

Yesterday the Court of Appeals held that a plaintiff waived her right to arbitration when she requested a jury trial and litigated the matter for about two years, but then moved to compel arbitration on the eve of the second scheduled trial date. The case is Herbert v. Marcaccio.

In Herbert, the trial court concluded that plaintiff waived her right to arbitration by proceeding with litigation "so far and in such a manner" that defendant was prejudiced by having to expend "significant resources." The trial court noted that plaintiff waived arbitration by failing to respond to discovery.

The COA agreed that Plaintiff waived her right to compel arbitration, but not due to any action related to discovery. The COA held that the waiver occurred because Plaintiff failed to demand arbitration after the right accrued and after Defendant expended significant resources. The right to demand arbitration accrued on 24 February 2007, and Plaintiff filed the suit eight months later requested a jury trial. Over the course of the next two years, Defendant's counsel had to "prepare for and attend three court hearings and engage in other defense activities, resulting in an expenditure of resources (including time and expense)that would have been unnecessary had plaintiff moved to compel arbitration earlier." Over that time period plaintiff gave no indication that she had changed her mind about proceeding with a jury trial, and Plaintiff did not move to compel arbitration until right before the second scheduled trial date.

The COA also held that the trial court did not need to make specific findings regarding the exact costs expended by Defendant in order to conclude that it had expended significant resources on the lawsuit due to Plaintiff's failure to demand arbitration. The COA found that Defendant's counsel's attendance at multiple hearings and participating in litigation for two years was enough to support a conclusion that "significant resources" were expended.

COA Opinions

2011-07-19T09:29:00.002-05:00

Today the North Carolina Court of Appeals issued 32 opinions. We will post on any opinions of note later.

COA Opinions

2011-07-05T15:02:00.001-05:00

The COA published 17 opinions today: ten civil, six criminal, and one juvenile. Expect posts on the civil cases shortly.

COA Finds Foreign Defendants' Contacts Insufficient to Establish Personal Jurisdiction

2011-06-07T17:17:00.004-05:00

Today the Court of Appeals found that the following contacts were not sufficient to warrant the exercise of personal jurisdiction over a foreign corporation: the corporation's agent had an unrelated business meeting in NC, that agent participated in unrelated North Carolina litigation, and the corporation signed a settlement agreement in with unrelated NC parties that subjected it to continuing obligations to those parties. The case is Evonik Energy Services GMBH v. Ebinger.

Marik Blohm formerly worked for defendant ENVICA Kat GmbH, where he signed an employment agreement with that defendant that he “shall maintain the strictest secrecy about all operational and business matters and processes . . . which become known to him in his work and its surrounding circumstances both during the employment relationship and after its termination.” The contract was signed in Germany and was governed by German law. Blohm left the company, and later transferred ownership of some European Patent applications on which he is listed as a co-inventor to Evonik, a German corporation whose wholly-owned subsidiary Evonik Energy Services is a North Carolina company. ENVICA Kat notified Blohm that the patents contained information that came from his former employment, and that he had violated his employment agreement. Evonik sought a declaratory judgment that it was the lawful owner of the patent applications. Plaintiff appealed the trial court's ruling that it lacked personal jurisdiction over defendants.

The COA affirmed, holding that Defendants' contacts with North Carolina were not sufficient to establish personal jurisdiction. Defendant Frank Ebinger's participation as a third-party witness in unrelated North Carolina litigation, Ebinger's 2008 meeting in North Carolina related to that litigation, two letters from ENVICA Kat GmbH to Blohm, and Defendants' obligations under a settlement agreement in an unrelated matter were "sporadic rather than continuous" contacts, none of which shows Defendants "purposefully availing themselves of the privilege of conducting activities within the state" or "invoking the benefits and protections of its laws." The COA further concluded Defendants’ contacts were not the source of the present lawsuit - the source of Evonik’s lawsuit was the employment contract. Finally, the Court held that North Carolina has no interest in a case that involves a breach of contract under German law and matters of European and United States Patent law.

COA Opinions

2011-06-07T17:16:00.001-05:00

Today the COA handed down 25 published opinions, 19 of them civil. Look for more on these shortly.

COA Opinions

2011-05-17T11:16:00.002-05:00

The Court of Appeals issued 23 opinions today. We will have more on any cases of interest later.

COA: Arbitration Clause in Contract Does Not Apply to Related Guaranty Agreement

2011-05-04T14:50:00.012-05:00

Yeserday the COA held that an arbitration agreement in a contract does not apply to a separate indvidual guaranty of the obligations in that contract. The case is D.P. Solutions, Inc. v. Xplore-Tech Services et al.

The plaintiff and defendant corporations entered into a Share Purchase Agreement that contained an arbitration clause. Two individual defendants entered into a Personal Guarantee of the Share Purchase Agreement, which did not contain an arbitration clause. Defendants moved to compel arbitration on issues related to both contracts, claiming that the arbitration clause in the Share Purchase Agreement between the corporations should also apply to the personal guarantee of the individual defendants.

The Cour held that the obligation of a guarantor is separate and independent of the obligation of the primary contracting party. The Court indicated that the outcome may have been different if the guarantors had signed the guaranty specifically in their capacity as corporate officers. Defendants contended they were indeed acting as corporate agents, but the express terms of the guarantee stated that they were acting in their individual capacities.

COA Opinions

2011-05-04T14:47:00.002-05:00

Yesterday the COA dropped 24 published opinions, 14 of them civil, 9 criminal, and one juvenile. We will post more on relevant cases shortly.

Court of Appeals Opinions

2011-04-19T15:31:00.004-05:00

Today the COA issued 33 opinions, 25 of them civil, two juvenile, and six criminal. We'll have more on any relevant cases soon.

Unique Event! Join NC Attorney General Roy Cooper & Womble Carlyle for the CLE Symposium for Top NC Legal Counsel on May 5

2011-04-12T12:43:00.001-05:00

Womble Carlyle CLE Symposium for Top NC Legal Counsel
A full-day CLE event for in-house counsel
May 5, 2011 -- 8:30-4:30 p.m.
10 CLE Sessions, Lunch and Keynote Address by North Carolina Attorney General Roy Cooper

On May 5, Womble Carlyle will offer CLE sessions on such topics as:

political contributions/lobbying

data management

economic development

crisis/catastrophic event planning

employee defection/personnel departures

outsourcing agreements

intellectual property minefields

legal project management

the China market

‘green’ strategies

Event information

Location: Proximity Hotel
704 Green Valley Road
Greensboro, NC 27408
(800) 379-8200
http://www.proximityhotel.com/
Reference this event when booking overnight stay to receive special rate.

RSVP: There is no fee to attend but seating is limited.
Please RSVP by Friday, April 22nd, using one of the following methods:
phone: (336) 433-5699
email: greensbororsvp@wcsr.com

Click here for information on the ten panels that are being offered to top legal counsel in North Carolina.

Register today!

Today at the Court of Appeals (4/11/11)

2011-04-11T08:25:00.000-05:00

Today, a panel of the North Carolina Court of Appeals comprised of Chief Judge Martin and Judges Elmore and Geer will hear oral argument in State v. Hayden. The appeal involves a challenge to the Defendant's conviction on the charge of first degree murder. The Defendant contends that (1) the trial court should have granted the Defendant's motion to dismiss the murder charge and vacate his conviction because the state failed to present evidence beyond a mere suspicion that the Defendant was the perpetrator; (2) the trial court improperly admitted hearsay statements; and (3) that the trial court improperly admitted character evidence.

Documents:
Record on Appeal
Appellant's Brief
Appellee's Brief

Supreme Court Opinions

2011-04-08T12:18:00.000-05:00

Today, the North Carolina Supreme Court issued two opinions:

Raymond v. Police Benevolent Association - In an opinion authored by Justice Newby, a unanimous Supreme Court determined that the attorney-client privilege can protect communications between a professional membership association, one of its members, and an attorney hired by the association to represent that member.

Gardner v. Tallmadge - The opinion of the Court of Appeals was affirmed in a per curiam opinion. Prior coverage of this case can be found here and here.

COA Opinions

2011-04-05T08:55:00.000-05:00

Today, the North Carolina Court of Appeals published 21 opinions. We will have more on any cases of interest later.

COA Opinions

2011-03-15T20:43:00.003-05:00

Today the Court of Appeals released 19 published opinions, 11 of them civil, two juvenile, and six criminal. We'll have more on the relevant cases from this batch shortly.

Today at the Supreme Court (3/15/11)

2011-03-15T00:01:00.001-05:00

Today, Tuesday, March 15, 2011, the North Carolina Supreme Court will hear oral arguments in the following cases:

State v. Yencer - Whether the First Amendment precludes private colleges and universities who have a religious history and tradition from having a campus police force that exercises the State's arrest power.

Appellant's New Brief
Appellee's New Brief
Amicus Brief by Fraternal Order of Police
Amicus Brief by Trustees of Davidson College
Amicus Brief by NC Association of Campus Law Enforcement Administrators, The North Carolina Sheriff's Association, and the North Carolina Association of Chiefs of Police
Amicus Brief by the North Carolina Independent Colleges and Universities
Amicus Brief by the North Carolina Advocates for Justice
Court of Appeals' Opinion
Record on Appeal

Lee v. Gore - Whether a deficiency in a law enforcement officer's affidavit divests the Division of Motor Vehicles of authority to suspend the driving privileges of a person who has refused to submit to chemical analysis when charged with an implied consent offense.

Appellant's New Brief
Appellee's New Brief
Court of Appeals' Opinion
Record on Appeal

Gardner v. Tallmadge - Whether a Court of Common Please in Ohio has subject matter jurisdiction to enter a cognovit judgment against a North Carolina debtor and whether the Full Faith and Credit Clause requires North Carolina's courts to recognize and enforce a valid judgment in the state of Ohio.

Appellant's New Brief
Appellee's New Brief
Court of Appeals' Opinion
Record on Appeal

Today at the Supreme Court (3/14/11)

2011-03-14T00:01:00.002-05:00

Today, Monday, March 14, 2001, the North Carolina Supreme Court will hear oral arguments in the following cases:

Conner v. NC Council of State - Section 15-188 of the North Carolina General Statutes require the superintendent of Central Prison in Raleigh to "cause to be provided, in conformity with this Article and approved by the Governor and Council of State, the necessary appliances for the infliction of the punishment of death and qualified personnel to set up and prepare the injection, administer the preinjections, insert the IV catheter, and to perform other tasks required for this procedure in accordance with the requirements of this Article."

Pursuant to this provision in February 2007, the North Carolina Council of State approved an execution protocol ("Protocol") prepared and submitted by the Secretary of the Department of Corrections and the Warden of Central Prison. Shortly thereafter, a group of death row inmates filed a petition for a contested case hearing in the Office of Administrative Hearings to challenge the Council's approval.

The Council filed a Motion to Dismiss, arguing that the OAH lacked jurisdiction to consider the Petition and that the death row inmates were not "persons aggrieved" under the Administrative Procedures Act. The administrative law judge assigned to the case rejected the Council's motion to dismiss and recommended that the Council reconsider its approval of the Protocol. The Council subsequently issued a Final Decision and Order that concluded that the OAH lacked jurisdiction over the Petition and rejected the ALJ's findings.

The inmates filed a Petition for Judicial Review in Wake County Superior Court seeking to overturn the Council's Final Decision and Order. The Petition was dismissed by the Superior Court on the ground that the OAH lacked jurisdiction to review the Council's approval of the Protocol.

The inmates filed a notice of appeal to the Court of Appeals. However, in May 2010, the Council filed a Petition for Discretionary Review Prior to a Determination by the Court of Appeals. The Supreme Court allowed the petition in October 2010.

This case will address whether the Council - which is subject to the APA - is required to comply with the hearing provisions of the APA when approving rules promulgated by APA-exempt organizations such as the Department of Corrections; whether death row inmates qualify as persons aggrieved by the approval of the Protocol; and whether the inmates have suffered a cognizable injury as a result of the approval of the Protocol.

Record on Appeal (Part 1)
Record on Appeal (Part 2)
Record on Appeal (Part 3)
Record on Appeal (Part 4)
Appellant's Brief
Appellee's Brief

In the Matter of J.H.K and J.D.K. - This case will address whether a trial court can conduct a termination of parental rights proceeding when the child's guardian ad litem is not present.

Appellant's New Brief
Appellee's New Brief
Amicus Brief from N.C. Association of Social Services Attorneys - Not Available.
Court of Appeals Opinion
Record on Appeal - Not Available

State v. Chodhry - This case will address whether a criminal defense attorney has a conflict of interest that disqualifies him from representing the defendant when the attorney has represented the State's key witness in a previous criminal matter.

Appellant's New Brief
Appellee's New Brief
Court of Appeals' Opinion
Record on Appeal

Supreme Court Opinions

2011-03-11T13:12:00.000-05:00

While many in North Carolina consider the Friday of the ACC Tournament to be a holiday, the North Carolina Supreme Court does not. Today, the North Carolina Supreme Court issued opinions in four cases. We will have more on any cases of interest ~~after the basketball games are over~~ later.

Today at the Court of Appeals (3/10/11)

2011-03-10T09:26:00.000-05:00

Today, Thursday, March 10, 2011, a panel of the North Carolina Court of Appeals comprised of Judges Stroud, Robert N. Hunter, Jr., and Thigpen will hear oral argument in the following case:

Meehan v. American Media International, LLC - Dr. Brian Meehan is one of an extensive list of individuals who were negatively impacted by their association with what has become known as the Duke Lacrosse Case. During the relevant time period Meehan served as the Executive Director of DSI, a company that engaged in DNA testing.

In the spring of 2006, the Durham Police Department contacted DSI to conduct DNA testing related to the Duke Lacrosse Case. Meehan contends that after DSI completed DNA testing on 46 cheek swabbings taken from members of the Duke Lacrosse team, he informed the Durham County District Attorney and several law enforcement officer that there were no incriminating matches between the samples and the specimens taken from the victim. Meehan also allegedly informed the District Attorney and law enforcement that he discovered traces of DNA from other unidentified males on the alleged victim's undergarments.

DSI subsequently issued a written report regarding the results of its testing. A dispute subsequently arose in the criminal proceeding over whether DSI's report fully and accurately disclosed the results of its testing. The lawyers for the Duke Lacrosse Players accused DSI of conspiring with the District Attorney to withhold exculpatory evidence. Meehan agreed to testify in court regarding the testing and the report. When he was placed on the stand, Meehan was questioned exclusively by the defense attorneys because the District Attorney declined to ask any questions. Meehan also appeared on 60 Minutes - although the circumstances surrounding Meehan's appearance are in question. The controversy over the testing and the report led to substantial negative publicity for DSI.

DSI subsequently terminated Meehan. Meehan's termination letter cited "poor communications" in his "failure to adequately explain DSI's role in [the Duke Lacrosse Case] to the public and to the lacrosse families during the multiple times [he has] testified." Meehan contends that these reasons for his termination were merely a pretext for dismissing him prior to the date Meehan was owed a "milestone payment" from DSI.

Meehan sued DSI and raised claims of breach of contract, breach of a covenant of good faith and fair dealing, a violation of North Carolina's wage and hour act, conspiracy to engage in wrongful conduct, and tortuous interference with contract. After conducting discovery, the Defendants moved for summary judgment and Meehan moved for partial summary judgment. The Court denied Meehan's motion and granted the Defendants' motion.

On appeal Meehan argues that the trial court erred by granting summary judgment for the Defendants due to the existence of genuine issues of material fact.

Briefs and Other Documents:

Record on Appeal (Part 1)
Record on Appeal (Part 2)
Record on Appeal (Part 3)
Record on Appeal (Part 4)
Appellant's Brief
Appellee's Brief

Today at the Court of Appeals (3/9/11)

2011-03-09T00:01:00.001-05:00

Today, Wednesday, March 9, 2011, a panel of the North Carolina Court of Appeals comprised of Judges Bryant, Elmore, and Geer will hear oral argument in the following case:

Marion Partners, LLC v. Weatherspoon & Voltz, LLP - This matter involves a claim of legal malpractice where the plaintiffs allege that their attorney failed to properly advise them of material changes in a commercial lease. The appellants are involved in the business of purchasing properties and then leasing the properties to CVS Corporation, a national drug store chain. According to the plaintiffs, CVS added a new provision to the standard lease agreement that shifted the responsibility to pay for any taxes resulting from a sale of the property and a reassessment of the property value from CVS to the plaintiffs. The plaintiffs allege that their attorney failed to advise them of this provision or its implications, resulting in substantial damages. After the parties conducted discovery, the defendants sought and were granted summary judgment as to all of the plaintiffs' claims.

On appeal the plaintiffs assert that the trial court erred by (1) disregarding statements in the plaintiff's affidavits because the statements were "not in direct contradiction" with the plaintiff's deposition testimony, but instead only served to "elaborate on their prior sworn testimony"; (2) granting summary judgment despite the existence of genuine issues of material fact; and (3) dismissing plaintiff's claims for negligent misrepresentation and breach of contract claim when they are allegedly based on different facts from the legal malpractice claim.

Briefs and Other Documents
Record on Appeal
Appellant's Brief
Appellee's Brief

Today at the Court of Appeals (3/8/11)

2011-03-08T08:33:00.000-05:00

Today, Tuesday, March 8, 2011, a panel of the North Carolina Court of Appeals comprised of Judges Robert C. Hunter, Stephens, and Ervin will hear oral arguments in the following cases:

State v. Carter - This appeal, which arises out of the fatal shooting of Winston-Salem Police Sergeant Howard Plouff, raises questions regarding whether the trial court should have suppressed statements made by Carter before he was given Miranda warnings; whether African-American jurors were wrongly excluded from the jury; whether the trial court erred in denying Carter's motion to dismiss the indictment; and whether the trial court erred by overruling Carter's objection to the submission of aggravating factors to the jury.

Record on Appeal
Appellant's Brief
Appellee's Brief

Wake Radiology v. NC DHHS - This appeal deals with an appeal of the decision by various State agencies to grant a Certificate of Need to Pinnacle Health Services of North Carolina to acquire a mobile magnetic resonance imaging scanner to serve various sites in Wake and Johnston Counties.

Record on Appeal - Part 1
Record on Appeal - Part 2
Record on Appeal - Part 3
Record on Appeal - Part 4
Record on Appeal - Part 5 (Not Available Online)
Appellant's Brief
Appellee NC DHHS's Brief
Appellee Intervenor Pinnacle Health Services' Brief

Today at the Court of Appeals (3/7/11)

2011-03-07T07:53:00.000-05:00

Today, March 7, 2011, beginning at 1:00 pm, a panel of the North Carolina Court of Appeals comprised of Chief Judge Martin and Judges McGee and McCullough is scheduled to hear oral argument in the following cases:

State v. Goode - The Court of Appeals will consider whether a trial court had jurisdiction to impose consecutive life sentences without parole against a criminal defendant after the defendant's death sentence was vacated by a federal court on the basis of constitutionally inadequate counsel.

Record on Appeal
Appellant's Brief
Appellee's Brief

Primerica Life Insurance Company v. James Massengill & Sons - This appeal raises the question of whether the trial court erred in granting a motion for a judgment not withstanding the verdict that vacated a jury award in a dispute over life insurance proceeds.

Record on Appeal (Part 1)
Record on Appeal (Part 2)
Appellant's Brief
Appellee's Brief

Web Page Printout Deemed Unauthenticated Hearsay

2011-03-01T23:59:00.003-05:00

In Rankin v. Food Lion, a unanimous panel of the North Carolina Court of Appeals determined that a trial court cannot consider printouts of web pages when deciding a motion for summary judgment.

Rankin filed a complaint in Mecklenburg County Superior Court alleging that she sustained serious injuries after slipping and falling at a Food Lion in Charlotte, North Carolina. Defendants subsequently sought, and were granted, summary judgment on the grounds that Defendant Food Lion Store #276 was not a legal entity, Defendants Food Lion, Inc. and Food Town Stores, Inc. no longer existed, and the Defendant Delhaize America, Inc. was a holding company who had no role in the operation of the Food Lion in which Rankin allegedly fell.

On appeal, Rankin contended that the trial court erroneously granted summary judgment to Delhaize because she "presented evidence that the Food Lion store in which [she] was injured is owned by" Delhaize. In support of this contention, Rankin pointed to "a page printed from the website of the North Carolina Secretary of State [and] an internet posting concerning" Delhaize. According to Rankin, these documents constituted "proof of evidence of public record" that should have been considered by the trial court.

In an opinion authored by Judge Ervin and joined by Judges Bryant and Steelman, the Court of Appeals rejected Rankin's argument and held that the printouts constituted "unauthenticated hearsay." As unauthenticated hearsay would not be admissible at trial, it would have been inappropriate for the trial court to consider it in connection with a motion for summary judgment.

While the Court of Appeals' opinion held that web page printouts are "unauthenticated hearsay," it provided no specific guidance on what a party needs to do to properly authenticate a web page or how a web page can fit within an exception to the hearsay rule. Given the ubiquitous nature of the internet, it is likely that the Court of Appeals will have additional opportunities to explain how the rules of evidence apply to the internet.

COA: Order Requiring Foreign Party to Appear for Jurisdictional Discovery Deposition Does Not Affect Substantial Right

2011-03-01T18:00:00.009-05:00

Today the Court of Appeals held that an interlocutory order compelling a party who resides in another country to appear in North Carolina for a jurisdictional deposition does not affect a substantial right and is not immediately appealable. The case is K2 Asia Ventures v. Trota.

Defendants, who live in the Phillipines, appealed the trial court's order requiring them to appear to appear for deposition in North Carolina. Defendants acknowledged tha the appeal was interlocutory, but Defendants claimed the order affected a substantial right and thus justified an immediate appeal.

The COA disagreed. The Court noted that discovery issues are not immediately appealable, and found that Defendants' alleged right under Rule of Civil Procedure 30(b)(1) to be deposed only in a county where they reside was not a substantial one. The COA also found that avoiding the expenditure of time and money (Defendants would have to travel from the Phillipines to be deposed) is not a substantial right, and that the order had nothing to do with the issue of venue (which *is* immediately appealable). The Court finally noted that the trial court's order did not violate Defendants' due process rights because the depositions were "obviously" limited to the issue of personal jurisdiction (even though the order did not specify this), and that by appearing for the limited purpose of challenging jurisdiction, Defendants "voluntarily submitted to North Carolina jurisdiction to decide the issue of personal jurisdiction[.]" The Court concluded that no substantial right was affected and that immediate appeal was not warranted, and dismissed the appeal.

Busy Day at the COA

2011-03-01T11:38:00.000-05:00

The North Carolina Court of Appeals issued 36 opinions today. We will review them and post on any cases of interest later.

Today at the Court of Appeals

2011-02-24T09:44:00.000-05:00

Today, a panel of the North Carolina Court of Appeals comprised of Judges Stroud, Robert N. Hunter, Jr., and Thigpen will hear oral argument in the following cases:

McKinnon v. CV Industries - This case involves a question of whether there was a genuine issue of material fact that precluded a finding of summary judgment.

Garlock v. Wake County Board of Education - This case involves an appeal of the dismissal of a claim against the Wake County Board of Education arising out of an alleged violation of the North Carolina Open Meetings Law. The case is part of the ongoing debate in Wake County over how school children should be assigned to schools in Wake County.

Today at the Court of Appeals

2011-02-23T05:00:00.092-05:00

Today, Wednesday, February 22, 2011, a panel of the North Carolina Court of Appeals comprised of judges Calabria, Steelman, or Beasley will hear oral argument in the following case:

RS&M Appraisal Services, Inc. v. Alamance County, et al.

In May 2009, RS&M Appraisal Services, Inc, instituted suit in Lincoln County Superior Court against Alamance County alleging that the County failed to pay for services provided during the County's 2009 Reappraisal Project. The County's Answer denied the material allegations contained in the Complaint, requested that the court transfer the matter to Alamance County, and sought to have the Complaint dismissed because (1) the contract was overbilled by RS&M and overpaid by the County; (2) that the contract was not validly amended under North Carolina General Statutes Section 159-28; and (3) that Alamance County had not waived governmental immunity.

The County also brought several counterclaims against RS&M. The County asserted that (1) overpayments by the County constitute exclusive emoluments under the North Carolina Constitution which must be returned to the County; (2) that RS&M breached the contract by failing "to provide competent employees of good character and having sufficient skills to perform the work" resulting in cost overruns; (3) breached the contract by failing to "furnish training, consultation, qualified appraisal personnel, qualified clerical personnel, and employee relationships"; and (4) that RS&M's actions constitute an unfair trade practice.

After the County's motion to transfer was granted, the County requested permission to add Ronald S. McCarthy, the owner of RS&M, and Kimberly D. Horton, the former Alamance County Tax Administrator, as counterclaim defendants. The County sought to bring fraud and bid-rigging claims against the coutnerclaim defendants for various actions taken during the bid process.

Ms. Horton responded by filing crossclaims against the County alleging that the County (1) violated the North Carolina Financial Privacy Act by obtaining her records from the State Employee's Credit Union and attaching them to pleadings in this action; and (2) violated the Alamance County employee personnel policy by failing to pay her for her accrued but unused vacation time.

The County moved to dismiss the crossclaims on the basis of governmental immunity and because its actions complied with North Carolina law. Judge Ben Tennille of the North Carolina Business Court denied the County's motion to dismiss and this appeal followed.

On appeal the County contends that it is entitled to sovereign immunity on the claim to receive compensation for unused vacation time because (1) the state wage and hour act law do not waive the County's immunity for such claims; (2) the policy providing for vacation pay was not a part of Horton's employment contract and therefore the employment contract cannot form the basis for a waiver of immunity; and (3) because Horton did not allege a waiver of immunity in her counterclaim.

The County also claims that it is entitled to have the Financial Privacy Act claim dismissed for several reasons. First, the County focuses on the allegation that the County violated Section 53B-3. The County contends that 53B-3 does not give rise to a cause of action because it is merely a policy statement. According to the County, Horton may have had a cause of action if she alleged a violation of certain other parts of Article 53B (or, presumably, added an "et seq." at the end of her citation), but she does not have one under the statute cited. The County also contends that Horton was not entitled to notice before her records were obtained and that it had the authority to publish the records after they were obtained by the Alamance County Sheriff's Office through a search warrant. Finally, the County argues that if a violation occurred, the violation was the fault of the Alamance County Sheriff's Office and the County cannot be held liable for the actions of the Sheriff.

Horton responds that sovereign immunity does not apply to breach of contract claims or claims based on implied employment contracts. Additionally, Horton rejects the County's assertion that 53B-3 is merely a directory statute and explains why she believes the County's actions violated the Financial Privacy Act.

Today at the Court of Appeals

2011-02-22T05:00:00.115-05:00

Today, Tuesday, February 22, 2011, the a three-judge panel of North Carolina Court of Appeals comprised of Judges Robert C. Hunter, Linda Stephens, and Sam J. Ervin, IV will hear oral argument in the following cases:

Wachovia Bank National v. Superior Construction Corp.

This case arises out of an action filed in Mecklenburg County Superior Court by Wachovia Bank, N.A., seeking a determination regarding whether a claim of lien filed by Wachovia had priority over a claim of lien filed by Superior Construction Corp. The Court of Appeals will consider whether a lien waiver executed by a contractor can effect a change in the date when the contractor first furnished materials and labor to a project.

Wachovia loaned Intracostal Living, LLC approximately $22.8 million for the construction of a high end condominium project. Wachovia secured this loan through a deed of trust filed on May 19, 2005. In September 2007, Superior filed a claim of lien asserting that it was owed $1.6 million for services provided for the condominium project. Superior further alleged that it first provided labor and materials to the condominium project on April 22, 2005. Superior executed partial lien wavers on May 11, 2005 and June 9, 2005 for labor and materials provided to those dates.

After being substituted as the plaintiff, Preserve Holdings, LLC, the owner of the land that was subject to the lien, filed a motion for judgment on the pleadings that asserted that Wachovia's deed of trust had priority over Superior's claim of lien. North Carolina Business Court Judge John R. Jolly determined that although North Carolina's lien statutes provide that claims of lien relate to the time of first furnishing of labor, the parties may waive these protections if they wish to do so. Judge Jolly went on to determine that the lien waivers executed by Superior constituted such a waiver and that any lien rights Superior had did not attach until after Wachovia filed it deed of trust. Therefore, in Judge Jolly's opinion, Wachovia deed of trust took priority over Signatures' claim of lien.

Murdock v. Thomas

Plaintiff Peggy Murdock instituted a civil action in Iredell County Superior Court against various entities related to a payday lending operation. Due to certain pretrial rulings, the case proceeded at the same time in both state court and in arbitration before the American Arbitration Association. With respect to the portion of the case that remained in state court, Judge Ripley E. Rand dismissed claims against several defendants because the named plaintiffs lacked standing to pursue claims against those defendants. However, the arbitrator's Class Determination Award approved a class that included class members who only had claims against these dismissed entities. The defendants unsuccessfully sought to have the Class Determination Award vacated by Judge Rand. This appeal followed.

Appellants contend that the Class Determination Award should be vacated because the class definition included claims against defendants that had been dismissed from the state action due to the named-plaintiffs' lack of standing. Additionally, the appellants assert that the class definition will allow class members to seek to pursue claims directly against them for alleged bad acts that were committed by the other parties.

Appellees contend that the case should be dismissed as interlocutory and that the appellants' arguments do not establish the manifest disregard of the law that is required to vacate the arbitrator's award.

COA Opinions

2011-02-15T09:59:00.000-05:00

This morning the North Carolina Court of Appeals issued eleven opinions. We will have more on any cases of interest later.

Appeal of Motion to Compel Arbitration Halts District Court Proceeding

2011-02-11T08:51:00.000-05:00

Yesterday, in an opinion drafted by Judge Duncan and joined by Judges Niemeyer and Keenan, the Fourth Circuit Court of Appeals held that an appeal of a denial of a motion seeking to require a party to arbitrate its claims divests the district court of jurisdiction to proceed with the case unless the district court finds that the appeal is frivolous. The case is Levin v. Alms and Associates, Inc.

The relevant facts in this case are fairly straightforward. In 2009, Levin filed suit against his financial advisers. His complaint contained claims of negligence, negligent misrepresentation, violation of the Investment Advisers Act of 1940, and breach of contract. Alms moved to dismiss the case or, in the alternative, to stay the action pending arbitration. Alms claimed that Levin was required to submit his claims to arbitration because a 2007 agreement that governed their relationship required that "[a]ny dispute shall be submitted to binding arbitration...." Levin claimed that the arbitration clause did not apply to claims that accrued prior to 2007. The district court agreed with Levin and ordered that while claims that accrued after January 1, 2007 must be handled through arbitration, claims that accrued prior to that date could be heard in the district court.

Alms filed a notice of appeal and requested that the district court stay any further proceedings until the appeal was resolved. The District Court denied the motion in part finding that the case could proceed "at least through discovery." Alms then requested that the Fourth Circuit stay the district court proceedings until the appeal was heard. The Fourth Circuit entered a temporary stay until the motion could be fully heard.

The opinion began by initially addressing whether the district court had jurisdiction to proceed with the case after Alms filed its notice of appeal. The Fourth Circuit recognized that the circuits were split on this issue:

The Third, Seventh, Tenth, and Eleventh Circuits have held that an appeal regarding arbitrability of claims does divest the district court of jurisdiction over those claims, as long as the appeal is not frivolous. The Second and Ninth Circuit have held that no such divestiture occurs.

The Fourth Circuit determined that the view of the Third, Seventh, Tenth, and Eleventh Circuits was the more persuasive of the two. The filing of a notice of appeal divests the lower court of "jurisdiction over 'those aspects of the case involved in the appeal,'" and because the "core subject of an arbitrability appeal is the challenged continuation of proceedings before the district court on the underlying claims" it would be inappropriate for the district court to proceed. Additionally, allowing the case to continue while on appeal, even through discovery, "would cut against the efficiency and cost-saving principles of arbitration."

However, the panel was cognizant of the potential that some parties would file a frivolous appeal simply to delay the action below from moving forward. A party who believes that an appeal has not been filed in good faith has the option to ask the district court to certify that the appeal is frivolous or forfeited. If the district court finds in the moving party's favor, the case may proceed. "In the event that such a certification occurs, the party alleging arbitrability may move [the Fourth Circuit] to stay the district court's proceedings pending a review of the frivolousness determination."

After addressing whether the district court could proceed with the case while the arbitration aspect of the case was on appeal, the panel addressed the merits of the district court's decision. The opinion held that the 2007 agreement's arbitration clause could apply to claims that accrued prior to 2007 because of the presumption in favor of arbitrability and prior decisions that "have generally applied broad 'any dispute' language retroactively, especially when combined with language that refers to all dealings between the parties.'" Given this holding, the district court's opinion was reversed.

February 10, 2011 at the Court of Appeals

2011-02-10T05:00:00.002-05:00

Today, Judges Geer, Stephens, and McCullough will hear oral argument in L & S Water Power v. Piedmont Triad Regional Water Authority. This case arises out of an inverse condemnation action connected to the development of a public water supply for the Piedmont Triad. The trial court determined that the Water Authority had taken riparian rights belonging to some of the plaintiff and that the affected plaintiffs were entitled to compensation. The Water Authority contends that the trial court erred in its application of the riparian rights doctrine, in its holding that the plaintiffs did not have to exhaust their administrative remedies prior to brining an inverse condemnation claim, and that the by determining that just compensation is valued by the diminution of each affected plaintiff's capacity to produce electricity.

Today at the Court of Appeals

2011-02-09T09:32:00.002-05:00

Today, Wednesday, February 9, 2011, oral argument will take place before two panels of the Court of Appeals.

Beginning at 9:30 a.m., Judges Calabria, Stroud, and Robert N. Hunter, Jr. will hear oral argument in Ehrenhaus v. Baker. Ehrenhaus is a somewhat unusual appeal because the plaintiff and defendants have no problems with the decisions issued by former North Carolina Business Court Judge Albert Diaz (Judge Diaz has since joined the United States Court of Appeals for the Fourth Circuit). Instead, the appeal is brought by two individuals who objected the approval of the class action settlement agreed to by the plaintiff and defendants.

The underlying case arose out of the merger between Wachovia and Wells Fargo during the height of the financial crisis in 2008. The Defendants-Appellees’ Brief contains a fascinating review of the various events that led up to the merger. The appeal will involve various issues raised by the objectors, including, (1) whether Wachovia’s shareholders were denied their voting rights regarding the merger (2) whether the trial court properly examined the qualifications and adequacy of the class representative and class counsel; (3) whether the settlement approved by the court was, in the words of the objectors, “unfair, unreasonable, and inadequate[;]” and (4) whether the notice to potential class members was so insufficient as to deny class members their due process right to opt out of the class.

Beginning at 1:00 p.m., Judges Elmore, Steelman, and Ervin will hear oral argument in the following cases:

The Travelers Indemnity Company v. Triple S. Marketing Group, Inc.

This matter arose out of an action by Travelers against Triple S. Marketing Group to collect money allegedly owed for unpaid workers compensation premiums. The parties eventually agreed to a consent judgment in which Triple S agreed to have a judgment entered against it in the amount of $203,462.00. Travelers filed a motion in Forsyth County Superior Court seeking approval attach a judgment lien to real property owned by Triple S’s majority shareholders. The lower court granted Travelers’ motion and this appeal followed.

Triple S raises the following issues on appeal: (1) whether the trial court had subject matter jurisdiction to hold the majority shareholders personally liable for the consent judgment entered against Triple S; (2) whether the trial court had subject matter jurisdiction during a supplemental proceeding to pierce Triple S’s corporate veil; and (3) whether the trial court correctly decided to pierce Triple S’s corporate veil.

Womble Carlyle attorneys Rick Rice and Gemma Saluta represent Travelers in this matter.

Sugar Creek Charter School, Inc. v. State of N.C. & Thomas Jefferson Classical Academy v. Rutherford County Bd.

North Carolina’s relationship with charter schools has been a hot topic of conversation lately. In addition to the General Assembly debating whether to lift the cap on the number of charter schools allowed under North Carolina law, the Court of Appeals will consider two cases related to the funding of charter schools. In Sugar Creek, the Plaintiffs contend that under the North Carolina Constitution and the North Carolina Supreme Court’s Leandro decision, the state and local governments are required to provide uniform funding to all schools regardless of whether they are charter schools or traditional public schools. In Thomas Jefferson, the Plaintiffs challenge the manner in which the Rutherford County Board of Education calculated the share of funds the charter school is entitled to receive.

Today at the Court of Appeals

2011-02-04T14:42:00.002-05:00

Today, Tuesday, February 8, 2011, a panel of the North Carolina Court of Appeals comprised of Judges McGee, Bryant, and Beasley is scheduled to hear oral argument in the following cases:

State v. Castillo

This case arises out of the defendant's conviction on charges related to the shooting of his father and two students at Orange County High School in 2006. The defense contended that Castillo was not guilty of these charges by reason of insanity.

The questions for the Court of Appeals are (1) whether the trial court committed plain error by failing to instruct the jury that the insanity defense applies if a defendant believed that due to mental illness that his conduct was morally right; and (2) whether the trial court abused its discretion by overruling the defendant's objection to the prosecution's statement during closing argument that the defense was relying on an insanity defense because it could not support its case with factual evidence.

Harston v. Tippett

In 2007, the Department of Transportation sent Harston a notice informing him that a billboard he erected on private property adjacent to I-85 that read "If you die today, where will you spend ETERNITY?" was illegal because Harston did not have an approved outdoor advertising permit. After unsuccessfully challenging the notice before the Department of Transportation, Harston sought judicial review in Wake County Superior Court. After considering cross-motions for summary judgment, the Court entered judgment in favor of the Department.

Harston asks the Court of Appeals to find that the statute at issue is unconstitutional on its face and as applied to him because it is a content based restriction that (1) is more favorable to commercial speech than non commercial speech and (2) discriminates against different types of noncommercial speech.

Liebes v. Guilford County Department of Public Health

This case presents an interesting challenge to the ban on smoking in most restaurants and clubs that went into effect in 2010. Gate City Billiards is challenging the smoking ban on the ground that the ban violates the Fourteenth Amendment to the United States Constitution because there is no rational basis for permitting smoking in nonprofit private clubs while prohibiting smoking in for profit clubs.

Supreme Court Opinions

2011-02-04T12:32:00.002-05:00

Today, the North Carolina Supreme Court issued opinions in five cases.

Notably, the Supreme Court issued an opinion in Munger v. State - a case that challenged the constitutionality of economic incentives provided by State and local governments to convince companies to locate in North Carolina. Womble Carlyle attorneys Burley Mitchell and Press Millen represented appellees Google Inc. and Madras Integration, LLC.

The question before the Supreme Court was whether the Plaintiffs had standing to challenge the incentives. The Court of Appeals held in a unanimous opinion that they did not. The Supreme Court determined that discretionary review had been improvidently allowed. Justice Barbara Jackson, who was part of the Court of Appeals panel that decided the case below, did not participate in the case at the Supreme Court. This ruling means that the Court of Appeals opinion will stand and, unless the matter is appealed to the United States Supreme Court, the case will be dismissed.

COA Opinions

2011-02-01T09:20:00.002-05:00

This morning the Court of Appeals issued 12 opinions. We will have more on any cases of interest later.

Fourth Circuit Notes

2011-01-27T10:44:00.001-05:00

A couple of quick notes on developments from the Fourth Circuit Court of Appeals:

On Wednesday, President Obama nominated Judge Henry F. Floyd to the Fourth Circuit. For the past seven years, Judge Floyd has served as a United States District Judge for the District of South Carolina.
Also on Wednesday, the Fourth Circuit granted a joint motion from Virginia Attorney General Ken Cuccinelli and the federal government to expedite proceedings in Virginia v. Sebelius - Virginia's constitutional challenge to the Patient Protection and Affordable Care Act. The case is scheduled to be heard between May 10 and 13th. It is anticipated that the Fourth Circuit will hear oral argument in another case challenging the constitutionality of the Act – Liberty University v. Geithner – on the same day oral arguments take place in Virginia v. Sebelius.

COA: Decision Upholding Punitive Damages Award Requires Written Rationale; No Award of Costs for Expert Witness Prep

2011-01-19T00:09:00.004-05:00

Today the COA held that a trial court's decision upholding an award for punitive damages must include the reasons for the same, and that the trial court improperly awarded costs for expert witness preparation time. The case is Springs v. City of Charlotte.

Springs brought a negligence suit against the city and other defendants related to a car accident in which she was rear-ended by a city bus. The COA first held that the trial court should have issued a written opinion spelling out its reasons for denying Defendants' motion for JNOV on the jury's punitive damages award, as required by N.C. Gen. Stat. § 1D-50. The COA remanded the case to the trial court for entry of a written setting out its reasons for upholding the punitive damages
award.

The COA also gave the trial court another issue to consider on remand - reassessment of its award of costs related to Plaintiff's expert witnesses. The COA first reviewed statutes that give the trial court authority to award costs: N.C. Gen. Stat. § 7A-305(d)(11) provides that costs may be awarded for the actual time an expert spends testifying, and N.C. Gen. Stat. § 7A-314(b) allows the trial court discretion to award fees for an expert witness' time in attendance at trial even when not testifying, as well as the expert's travel expenses. The COA concluded that the trial court erred in awarding costs for expert witness preparation time because there is no express statutory authorization for such costs.

COA Opinions

2011-01-18T08:39:00.001-05:00

The Court of Appeals released 14 opinions today. We will have more on any cases of interest later.

NC Case Before US Supreme Court

2011-01-12T09:19:00.002-05:00

Yesterday, the United States Supreme Court heard oral argument in Goodyear Luxembourg Tires v. Brown. The question before the Court was: "Whether a foreign corporation is subject to general personal jurisdiction, on causes of action not arising out of or related to any contacts between it and the forum state, merely because other entities distribute in the forum state products initially placed in the stream of commerce by the corporation." In other words, is a foreign company subject to the jurisdiction of a United States state court simply because another entity sells the foreign company's products in the United States.

The Supreme Court will be reviewing an opinion issued on August 18, 2009 by Judge Ervin of the North Carolina Court of Appeals. Judge Ervin, joined by Judges Wynn and Stephens, held that the Goodyear's foreign subsidiaries were subject to jurisdiction in North Carolina's state courts because had “purposefully injected their products into the stream of commerce” and “knew or should have known” that the tires would be distributed in the United States and North Carolina. The North Carolina Supreme Court denied Goodyear's petition for discretionary review on April 14, 2010.

SCOTUSblog has a variety of informative posts on the case:

Goodyear v. Brown Case Page (includes merits briefs and lower court opinions)
Oral Argument Preview
Oral Argument Transcript

Thigpen Reappointed to COA

2011-01-04T09:19:00.003-05:00

Various news outlets are reporting that Governor Perdue has appointed Judge Cressie Thigpen to the North Carolina Court of Appeals to fill the vacancy left by Barbara Jackson's election to the North Carolina's Supreme Court. Judge Thigpen was appointed in August to fill the seat vacated by Judge James A. Wynn upon his confirmation to the North Carolina Court of Appeals, but was defeated by Judge Doug McCullough in November's election.

COA Opinions

2011-01-04T09:18:00.002-05:00

The North Carolina Court of Appeals issued 19 opinions this morning. We will have more on any cases of interest later.

COA Opinions

2010-12-23T07:24:00.002-05:00

On Tuesday, the North Carolina Court of Appeals issued 27 opinions. We'll have more on any cases of interest after the holiday.

COA Declines to Enforce Arbitration Clause in Nursing Home Admission Agreement

2010-12-21T09:45:00.025-05:00

Today, in a very interesting opinion, the Court of Appeals held that the mother of a nursing home patient did not bind the patient or her estate to arbitration by signing an agreement to admit daughter to the nursing home that contained an arbitration clause. The case is Munn v. Haymount Rehabilitation and Nursing Center.

Plaintiff Munn, whose daughter Demetra Murphy died in a nursing home, filed a wrongful death action against the nursing home arising out of their medical treatment of Murphy. Munn filed the suit as administratrix of Murphy's estate. When Murphy was admitted to the nursing home Munn signed an "Admission Agreement." That agreement stated that it was “by and between Century Care of Fayetteville and Demetra Murphy (Resident) or Iris Munn (Responsible Party)." The term "Responsible Party" meant that Munn was responsible for payment of Murphy's nursing home care. The Admission Agreement contained provisions related to such payment, visiting hours, laundry options, and other "housekeeping" matters. The arbitration clause in the agreement required all disputes other than those related to debt collection to be arbitrated, and stated that it was binding on "all persons whose claims are derived through or on behalf of the Resident.”

The COA noted that Munn had to have some form of legal authority to enter into an arbitration agreement on behalf of Murphy or her estate, and found that Munn was not the actual or apparent agent of Murphy. In order for Munn to have actual authority, Murphy had to have actually consented to Munn acting on her behalf. The COA found that Murphy did not do so, even though at some point prior to her stay in the nursing home Murphy identified her mother as her next of kin and "primary contact." This was not enough to make Munn Murphy's general agent.

The COA also found that even though Munn was consulted about and made decisions regarding her daughter’s medical treatment, Munn was not authorized as or acted as if she were authorized to be "Murphy’s general agent in matters such as arbitration agreements." The COA pointed out that apparent authority rests on the principal's manifestations of authority - at the time that Munn signed the Admission Agreement containing the arbitration clause Murphy was “not responsive” and unable “to speak or communicate,” and thus did not give Munn authority to act as her agent for purposes of binding Murphy to arbitration. There was also no ratification of any apparent agency by Murphy. The COA further noted that the primary purpose of the Admission Agreement was to secure payment for the nursing home's services, not to bind Murphy to arbitration.

McCullough Wins Instant Runoff

2010-12-21T09:31:00.001-05:00

After a statewide recount, Doug McCullough was declared the winner of the race to replace Judge James A. Wynn on the North Carolina Court of Appeals. McCullough defeated incumbent Judge Cressie Thigpen, who was appointed to the Court of Appeals by Governor Perdue in August, by 6,655 votes.

Supreme Court: Partner Executes Contract On Behalf of Partnership Unless There's No Authority or Ratification

2010-12-20T17:11:00.004-05:00

Today the Supreme Court held that a partner in a licensed partnership signs contracts as an agent of the partnership unless the partner was not authorized to act on behalf of the partnership and the contract was not ratified by the partnership. The case is Medlin Construction v. Harris.

Medlin Construction, a partnership, built a house for the Harrises. The construction contract was signed only by Ron Medlin, a partner in Medlin Construction. Medlin was not a licensed contractor, but Medlin construction was. Medlin and Medlin Construction claimed that the Harrises failed to pay them for materials and labor in building the house, and the Harrises claimed that Medlin Construction/Medlin breached the construction contract and committed unfair and deceptive trade practices. On appeal, Medlin and Medlin Construction claimed that even though Medlin entered into an express construction contract, they could still recover in quantum meruit.

The Court disagreed. All parties agreed that Medlin Construction did not have a contractual relationship with defendants, but the Court found that one in fact did exist because Medlin was acting in his capacity as a partner and signed the contract on behalf of the partnership. Medlin Construction did not argue that Medlin lacked authority to enter into the contract on behalf of the partnership, and by getting materials, hiring subcontractors, and building the house, Medlin Construction acknowledged that Medlin was authorized to enter into the contract with the Harrises on behalf of the partnership. The Court concluded: "We hold that, as a matter of law, a contract for the construction of a home or building executed by a partner in a licensed partnership engaged in the construction business is the contract of the partnership unless the remaining partners can show that the partner was not authorized to act on behalf of the partnership and, if not so authorized, the partnership did not ratify the contract. Without this showing, a licensed construction contractor partnership cannot recover in quantum meruit."

Supreme Court Opinions

2010-12-20T16:53:00.003-05:00

Today, the North Carolina Supreme Court issued six opinions. We will have more on any cases of interest later.

Final Court of Appeals Race is Almost Over (Maybe)

2010-12-07T08:27:00.001-05:00

Various news sources are reporting that former North Carolina Court of Appeals Judge Doug McCullough has a 6,700 vote lead over incumbent Court of Appeals Judge Cressie Thigpen in the race to fill the seat vacated by Judge James A. Wynn. It is highly likely that McCullough will be declared the winner because the only county left to report – Warren County – had less than 6,700 votes cast in this race. Initial reports had Judge Thigpen leading by tens of thousands of votes, but apparently there was some sort of error in the way that the vote totals were tracked.

If the race is decided by less than 10,000 votes, which seems likely at this point, Judge Thigpen has the ability to request a recount. According to the Virginian Pilot, linked below, Judge Thigpen's campaign has not decided whether to ask for a recount.

WRAL - Correcting counting error leads to new leader in Court of Appeals race
Off the Record (Greensboro News & Record) – Instant runoff fiasco
News & Observer – Thigpen trails in instant runoff
The Virginian-Pilot – McCullough overtakes Thigpen in N.C. court race
Winston-Salem Journal – McCullough pulls ahead in runoff

Court of Appeals Opinions

2010-12-07T08:11:00.001-05:00

This morning the Court of Appeals published 29 opinions on its newly revised web site. We will have more on any cases of interest later. The next potential opinion release date is December 21, 2010.

Language of Forum Selection Clause Impacts Federal Jurisdiction

2010-11-29T17:45:00.001-05:00

In FindWhere Holdings, Inc. v. System Environment Optimization, LLC, the Fourth Circuit Court of Appeals determined that the use of the word "of" in a forum selection clause instead of the word "in" can deprive federal courts of jurisdiction to hear a case.

FindWhere Holdings filed suit in the Circuit Court for Loudon County, Virginia seeking to recover from a number of defendants for an alleged breach of contract. After the defendants removed the case to the United States District Court for the Eastern District of Virginia, the plaintiff filed a motion to remand based upon the language in the contract's forum selection clause. According to the plaintiff, the language in the clause that jurisdiction "shall lie exclusively in … the courts of the State of Virginia" precluded removal of the case to Federal court. The district court agreed and remanded the case to Loudon County. Defendants appealed to the Fourth Circuit Court of Appeals.

After conducting a brief review of the factual and procedural history of the case, the Fourth Circuit addressed whether it had jurisdiction to hear the appeal given the general prohibition on appellate review of remand orders contained in 28 U.S.C. § 1447(d). The Court determined that remand orders based upon the language of a forum selection clause do "not fall within the general prohibition of appellate review for remand orders pursuant to 28 U.S.C. § 1447(d)." Only remand orders based on a lack of subject matter jurisdiction or a timely raised defect in removal procedure are barred from appellate review. Thus, the Court of Appeals had jurisdiction to review the district court's determination on the motion to remand.

When the Court of Appeals turned to the merits of the appeal, it joined the Ninth, Tenth, Fifth, and First Circuits in adopting the "widely-accepted rule that forum selection clauses that use the term 'in [a state]' express the parties' intent as a matter of geography, permitting jurisdiction in both the state and federal courts of the named state, whereas forum selection clauses that use the term 'of [a state]' connote sovereignty, limiting jurisdiction over the parties' dispute to the state courts of the named state." Ultimately, the Fourth Circuit held that because "federal courts are not courts 'of' the state of Virginia," the district court lacked jurisdiction and correctly determined that the case should be remanded to Loudon County Circuit Court.

Court of Appeals Opinions

2010-11-16T09:55:00.001-05:00

Today the North Carolina Court of Appeals issued 17 opinions. We will have more on any noteworthy cases later.

The next release date for Court of Appeals' opinions is December7, 2010.

Today at the Supreme Court

2010-11-16T07:34:00.001-05:00

Today, Tuesday, November 16, 2010, the Supreme Court is scheduled to hear oral argument in three cases:

State v. Neil Matthew Sargeant
- Whether the trial court erred by taking verdicts on two theories as to the charge of first degree murder while the jury continued deliberations on a third.
- Whether the trial court erred by excluding a hearsay statement under the catch-all provision of Rule 804(b)(5)
In the Matter of HND
- Whether the failure of the trial court to make a finding that the alleged conditions caused the juvenile some physical, mental, or emotional impairment, or create a substantial risk of such impairment, to sustain an adjudication of neglect is reversible error.
- Whether a proper review of a trial court's finding of neglect entails a determination of (1) whether the findings of fact are supported by clear and convincing evidence; and (2) whether the legal conclusions are supported by the findings of fact.
State v. Artives Jerod Freeman
- Whether the trial court correctly permitted defendant's counsel to decline to exercise a preemptory challenge when the defendant, who determined to not be capable of representing himself, disagreed with this decision and the impasse was brought to the attention of the court.

Today at the Supreme Court

2010-11-15T07:52:00.001-05:00

Today, November 15, 2010, the North Carolina Supreme Court will hear oral arguments in three cases:

Morris Communications Corp. v. City of Bessemer City Zoning Board –
- Whether a reviewing court should accord deference to a zoning board's interpretation of a city's zoning ordinance or should review the interpretation de novo; and
- Whether the Court of Appeals erred in concluding that the Petitioner's zoning permit expired when the work authorized by the permit commenced within six months from the date of issuance
Wilson v. Wilson –
- Whether the Court of Appeals has jurisdiction to review an order despite failure to perfect the appeal;
- Whether North Carolina General Statutes Section 36C-1-105(b) requires a trustee to provide the trust beneficiaries with discovery in the form of an accounting where the trust instrument relieves the trustee of this duty and there is no evidence supporting that the accounting is necessary in the interests of justice.
In the Matter of ARD –
- Whether the trial court abused its discretion by failing to conduct an inquiry into whether respondent mother needed a guardian ad litem pursuant to North Carolina General Statutes Section 7B-1101.1(C)

NC Appellate Gets National Attention for Judicial Election Results

2010-11-09T12:38:00.003-05:00

National Review magazine’s popular online edition linked to this blog for results of last week’s judicial election results. One North Carolina Supreme Court seat and five Court of Appeals seats were decided in the elections.

Womble Carlyle attorney Bob Numbers provided in-depth coverage of the judicial elections. These elections received relatively little public notice compared to other, higher-profile state and local races. But they were important, as the political balance of the N.C. Supreme Court was up in the air pending the results of this election.

Numbers and fellow litigation attorney Amanda Ray contribute to the North Carolina Appellate Blog.

Supreme Court Opinions

2010-11-08T14:55:00.002-05:00

On Friday, November 5, 2010, the North Carolina Supreme Court issued two opinions.

In Kinlaw v. Harris, a divided Supreme Court affirmed and reversed an opinion from a divided Court of Appeals. Justice Newby, writing for a four justice majority, held that trial courts could determine on a case-by-case basis whether to allow a judgment debtor to exempt funds withdrawn from the debtor's individual retirement account ("IRA") from execution by creditors. While funds contained in an IRAs and similar retirement accounts are typically exempt from a judgment creditor's collection efforts, the majority explained that "there may be some circumstances under which withdrawn funds are no longer exempt from execution." (emphasis added) Although the majority did not specify what those circumstances were, the opinion seems to indicate that funds withdrawn for purposes other than retirement related expenses would not be exempt. The majority went on to hold – contrary to the majority opinion from the Court of Appeals – that the trial court did not abuse its discretion when it ordered that the judgment debtor place any funds withdrawn from his IRA into an escrow account in order to allow the judgment creditor to challenged the proposed withdrawal.

Justice Edmunds, joined by Chief Justice Parker and Justice Timmons-Goodson, concurred in part and dissented in part from the majority opinion. Justice Edmunds believed that both the corpus of the IRA and any future withdrawals were exempt from collections efforts. Justice Edmunds raised concerns that "[t]he majority's holding both thwarts the General Assembly's intent to exempt retirement funds and puts trial courts in the untenable position of determining which withdrawals from a debtor's IRA represent legitimate retirement expenses."

In State v. Waring, Justice Edmonds wrote for a unanimous court in upholding a death sentence in a case involving what the Court described as "a brutal, prolonged, and merciless killing."

Articles Regarding Judicial Elections

2010-11-05T08:29:00.003-05:00

Here are a few articles, editorials, and posts regarding North Carolina's Judicial Elections:

Rob Richie of The Center for Voting and Democracy published a piece titled "North Carolina uses Instant Runoff Voting for state, county-wide elections"
The Raleigh News & Observer Editorial Board opined that "[v]oters made a good case on Election Day that they're up to the job of electing appellate judges."
Mandy Locke of The Raleigh News & Observer explained the logistics behind the instant runoff portion of the election for the seat formerly held by Judge James A. Wynn.
Gary Marx of National Review Online's Bench Memos blog briefly discussed the outcomes in North Carolina's judicial elections.

Judicial Election Results

2010-11-03T09:26:00.004-05:00

One seat on the North Carolina Supreme Court and five seats on the North Carolina Court of Appeals were up for grabs in yesterday's election.

In the race to replace retiring Supreme Court Justice Edward Brady, North Carolina Court of Appeals Judge Barbara Jackson prevailed over her colleague Robert C. Hunter by a margin of 51.88% to 48.12%. As noted on National Review Online's Bench Memos blog, the political balance of the Supreme Court was in play in this election. The election of Judge Jackson, a registered Republican who Bench Memos said "worked to position herself as the candidate of choice for judicial conservatives," means that the Supreme Court will retain its 4-3 Republican majority. Governor Beverly Perdue will appoint a judge to fill Justice-elect Jackson's seat on the Court of Appeals.

Incumbents were the big winners in the North Carolina Court of Appeals races:

Court of Appeals Judge Ann Marie Calabria defeated Wake County District Court Judge Jane Gray by a margin of 53.71% to 46.29%.

Judge Rick Elmore retained his seat on the Court of Appeals despite a serious challenge by Steven Walker, a law clerk at the North Carolina Supreme Court. Although the candidates remained relatively cordial throughout the campaign, Walkers credentials and qualifications for a seat on the court were repeatedly called into question by the "legal establishment."

Judge Martha Geer overcame a challenge by Employment Security Commission Appeals Referee Dean Poirier by a margin of 1,112,435 votes to 747,587 votes.

Judge Sanford Steelman will also be returning to the Court of Appeals for another term, but because he was running unopposed his reelection was never in doubt.

The final Court of Appeals seat on the ballot was the seat recently vacated by Judge James A. Wynn upon his confirmation to the Fourth Circuit Court of Appeals. As readers of this blog will recall, Governor Beverly Perdue appointed Cressie Thigpen to Judge Wynn's seat until a successor could be elected and sworn in.

Judge Thigpen was one of thirteen candidates who competed for Judge Wynn's seat under an Instant Runoff Voting ("IRV") system. North Carolina was the first state in the nation to use IRV for a statewide election. To summarize the IRV system, voters were required to rank their top three candidates from 1-3. If any candidate received more than 50% of the first place votes, that candidate would be declared the winner. If no candidate receives more than 50% of the first place votes, the top two first place vote getters are placed into an "instant runoff." The candidate in the instant runoff that was ranked higher on more ballots would be declared the winner.

According to the Board of Election's web site, Judge Thigpen received 20.30% of the first place votes and former North Carolina Court of Appeals judge Doug McCullough received 15.23% of the first place votes. Despite the allegedly instant nature of the runoff, a final announcement on the winner of the Thigpen/McCullough runoff is not expected for a few weeks.

COA Opinions

2010-11-02T07:55:00.002-05:00

The Court of Appeals issued 18 opinions today. The next release date for Court of Appeals Opinions is November 16, 2010.

COA: Right to Representation by Out of State Counsel Is Not A Substantial Right

2010-10-19T17:57:00.010-05:00

Today the COA held that a denial of appellant's request to be represented by out-of-state counsel does not affect a substantial right and thus an interlocutory appeal of such a denial is not allowable. The case is Dance v. Manning.

Dance brought claims against Defendants related to her alleged wrongful discharge from the Pitt County Sheriff's Department. Dance filed a voluntary dismissal of the first suit alleging these claims. In that case she was represented by a Maryland attorney who was admitted pro hac vice. Dance refiled the lawsuit and moved to have the Maryland attorney again admitted pro hac vice. The trial court denied this motion.

The COA held that in this situation the right to be represented by an attorney of the Plaintiff's choice was not a substantial right. Here, there was no ongoing litigation in which the Maryland attorney had been involved, and the attorney had no recognized expertise in that type of case. Here the “litigation was still in its infancy, and plaintiffs’ counsel does not hold any unique expertise that cannot be found elsewhere in our state bar.” The COA further held that the denial of the motion did not serve as a revocation of the attorney's pro hac vice admission in the suit that was voluntarily dismissed, because when a plaintiff files a voluntary dismissal, “it [is] as if the suit had never been filed.” Thus, any orders from the first lawsuit had no applicability to the second suit.

COA: Corporate Agent Can Invoke Arbitration Agreement Between Corporation and Plaintiff

2010-10-19T17:56:00.006-05:00

Today the COA held that an agent of a corporation can invoke an arbitration agreement in a lawsuit against him in his individual capacity, even though he was not a party to the agreement. The case is Ellison v. Alexander.

Plaintiffs claimed that Defendant was the CEO and director of a company known as The Elevator Channel, and that he induced them to invest in that company by misrepresenting certain material facts about his personal background (his education, experience, etc) and other matters. The stock purchase agreement signed by Plaintiffs provided that all disputes arising from the agreement would be subject to arbitration. The trial court denied Alexander's motion to compel arbitration.

The COA reversed and held that a valid arbitration provision existed. The COA first concluded that because the stock purchase agreement spelled out the terms and
conditions under which Plaintiffs invested in the Company, their claims were connected to the agreement. The COA then held that the arbitration clause of the stock purchase agreement was enforceable even though he was not an individual signatory of the agreement. Because his alleged liability arose from his actions as an agent of the corporate signatory to the arbitration agreement, he was not precluded from enforcing the provisions of the arbitration clause contained in that document.

COA Opinions

2010-10-19T08:28:00.001-05:00

Today the Court of Appeals issued 14 opinions. Most of the opinions appear to be criminal in nature, but if there any opinions of note, we will let you know. The Court of Appeals' next opinion release date is November 2, 2010.

Supreme Court Cases

2010-10-08T17:16:00.002-05:00

Today the North Carolina Supreme Court issued 17 opinions and issued rulings in a variety of other matters. The next anticipated petition release date for the Supreme Court is November 5, 2010.

Inconspicuous Cognovit Warning Precludes Enforcement of Foreign Judgment

2010-10-06T08:14:00.006-05:00

In Gardner v. Tallmadge, a divided panel of the Court of Appeals determined that a foreign judgment could not be enforced in North Carolina because - in the majority's opinion - the Ohio court that originally issued the judgement lacked the necessary subject matter jurisdiction to do so.

In March 2004, Defendant Bruce Tallmadge entered into a "demand cognovit promissory note" with Plaintiff Michael Gardner. A cognovit agreement in "which the debtor consents in advance to the holder's obtaining a judgment without notice or hearing, and possibly even with the appearance, on the debtor's behalf, of an attorney designated by the holder." Pursuant to the cognovit agreement, after an alleged breach of the terms of the note Gardner filed a verified complaint against Tallmadge, an attorney appointed by Gardner to represent Tallmadge entered answer that confessed judgment in favor of Gardner, and, less than two weeks after complaint was filed a judgment was entered against Tallmadge.

Gardner subsequently initiated an action to confirm the judgment in Rockingham County. Tallmadge challenged the enforcement action on several grounds, including that the Ohio court lacked subject matter jurisdiction. The Honorable L. Todd Burke entered an order "recognizing and giving full faith and credit to the Ohio judgment[.]" Tallmadge appealed Judge Burke's order.

The majority opinion, authored by Judge Linda Stephens and joined by Judge Robert N. Hunter, Jr., reversed Judge Burke's opinion on the ground that the Ohio court did not have subject matter jurisdiction to enter the original judgment. The majority's conclusion was based upon Ohio statutes and case law that render cognovit agreements invalid and deprive courts of jurisdiction to enforce them unless the agreement contains warning language that is "in such type size or distinctive marking that it appears more clearly and conspicuously than anything else on the document[.]"

According to the majority, the warning language regarding the cognovit agreement in the did not meet the standard required by Ohio law:

In the present case, the warning language in the Note appears directly below the
space provided for Defendant’s signature, as mandated by Ohio Rev. Code Ann. §
2323.13(D). The warning language appears in all-capital letters. However, the
Note’s page headings and the introductory phrases “FOR VALUE RECEIVED” and “IN
WITNESS WHEREOF” are also written in all-capital letters in the same font size
as the warning language and, thus, are equally conspicuous. Furthermore, the
most prominent, conspicuous, and distinctive markings on the Note are the title
and the eight subject headings which not only appear in all-capital letters of
the same font size as the warning, but are underlined as well. Thus, the title
and the subject headings appear more clearly and conspicuously than the warning
language.

In the majority's opinion, the failure to make the cognovit warning language more conspicuous than anything else in the loan agreement deprived the Ohio courts of subject matter jurisdiction to enter a judgment. The Ohio court's lack of subject matter jurisdiction meant that North Carolina's courts could not enforce the judgment.

Although he found that the case presented "a number of troubling issues," Judge Sanford L. Steelman., Jr. dissented from the majority opinion because "the conspicuous nature of the cognovit warning is not one of them." Judge Steelman determined that the language regarding the cognovit agreement complied with Ohio law because it "is clearly the most conspicuous portion of the document." Judge Steelman's opinion that the warning language complied with Ohio law was based upon an Ohio Court of Appeals decision that declared an argument very similar to the majority's reasoning to not only be incorrect, but "specious."

Court of Appeals Opinions

2010-10-06T08:12:00.003-05:00

Yesterday the North Carolina Court of Appeals published fourteen opinions. The Court of Appeals will next release opinions on October 19, 2010. The Supreme Court is expected to release opinions this Friday.

COA Opinions

2010-09-21T12:09:00.002-05:00

The North Carolina Court of Appeals issued 11 opinions this morning. At first glance it does not appear that any of the opinions are related to the focus of this blog, but if, upon further review, we find something interesting, we will let you know.

H-P Sues Former CEO on Inevitable Disclosure Premise

2010-09-09T08:23:00.002-05:00

We've been on vacation and, of course, the wires have been buzzing with news of H-P suing its former CEO, Mark Hurd, upon learning of his future employment with Oracle. We don't need to go into the details - this is the inevitable disclosure doctrine at work. You'll recall that covenants not to compete in California are virtually worthless in the employer-employee setting, with a specific statute that declares them illegal restraints on employee mobility.

We'll keep an eye on this case for you and report back once we know what legal angle H-P will push.

COA: No Minimum Contacts Where Defendant's Only Contacts Were Attempts to Resolve the Matter

2010-09-08T16:52:00.011-05:00

Yesterday the COA held that, due in part to NC's public policy favoring settlement, minimum contacts have not been established where Plaintiff's first and only contacts with the State were attempts to resolve the case before a Conplaint was filed. The case is Smith Architectural Metals v. American Railing Systems.

Smith Architectural Metals contracted with American Railing Systems, a Pennsylvania company, to supply it with railing materials. American Railing then subcontracted with First Line, also a Pennsylvania corporation, to apply a “powder coating” to the railings. First Line then returned the railings to American Railing who then shipped the finished product to Smith Metals in North Carolina. Within three months the railing coating flaked and fell off.

The COA held that trial court did not have jurisdiction over First Line because it did not have sufficient minimum contacts with North Carolina. After it found out about the flaking railing coating, First Line sent emails, faxes, and checks to reimburse Smith Metals for the coating, before the Complaint in this matter was filed. These attempts to fix the situation were its first contacts it had with North Carolina. None of these activities indicate that First Line purposefully availed itself of the “benefits and protections” of the laws of North Carolina sufficient to establish personal jurisdiction over it. In fact, the COA noted,First Line’s sole purpose for these contacts was to attempt to resolve the problem without resort to litigation, and it would “offend traditional notions of fair play and substantial justice" to penalize First Line for doing so.

The COA reached this conclusion in part based on NC's public policy of encouraging settlement, and it concluded that there are no "meaningful distinction between offers to correct a problem pursuant to cooperative negotiations before the filing of a complaint and offers to settle once a lawsuit has begun."

COA Opinions

2010-09-08T07:29:00.002-05:00

The Court of Appeals returned from the Labor Day holiday with 27 opinions for us. We will have more on these opinions later.

13 Candidates for Wynn Seat

2010-09-01T07:10:00.002-05:00

As readers of this blog know, Judge Jim Wynn was recently confirmed to the Fourth Circuit Court of Appeals. Judge Wynn's confirmation to the Fourth Circuit created an opening on the North Carolina Court of Appeals. Because this opening occurred more than 60 days before the date of the general election, the North Carolina Constitution requires that the Wynn Seat be placed on the ballot for the November election.

The filing period to run for the Wynn Seat closed yesterday, August 31, 2010. Thirteen candidates have thrown their hat in the ring for Judge Wynn's former seat. The complete list of candidates is available here. The candidates include Judge Cressie Thigpen who was appointed to the Wynn Seat by Governor Perdue on August 23, 2010. Judge Thigpen's appointment runs until the end of the year at which time the winner of the race for the Wynn Seat will replace Judge Thigpen (unless, of course, Judge Thigpen wins the election).

On election day, North Carolina's voters will use an "instant runoff" method to elect Judge Wynn's successor. Voters will be required to rank their top three candidates. If any one candidate receives more than 50% of the first place votes, that candidate wins the election. If no candidate receives the necessary number of first place votes, the two candidates with the greatest number of first place votes advance to the "instant runoff." In the instant runoff round, each ballot counts as a vote for whichever of the two final candidates is ranked highest by the voter. The candidate with the most votes in the second round wins the election.

With the addition of the Wynn Seat to the ballot, 5 of the 15 seats on the Court of Appeals are up for election. The outcome of these races could have a drastic outcome on the composition of the Court for years to come.

NC Supreme Court: Right to Non-Mandatory Appeals From Previous Orders In A Case Not Waived Until After A Final Judgment Is Entered

2010-08-27T13:12:00.017-05:00

Today the Supreme Court of North Carolina held that a party does not waive its right to appeal orders entered prior to a final order in a matter, as long as an immediate appeal from the prior orders was not mandatory. The case is Stanford v. Paris.

This case involved construction of a will and multiple plaintiffs and defendants. The trial court entered several orders dismissing various defendants, including one entered February 16, 2007. On July 18, 2008 the trial court entered a final consent judgment which acknowledged that the only remaining issues were one of the defendant's liability for a few remaining items in the estate. The consent judgment also stated that it was a final judgment and resolved all outstanding issues. Plaintiffs timely appealed the consent judgment, and also appealed several previously entered orders, including the February 16, 2007 order.

Defendants claimed that Plaintiffs should have filed their notice of appeal within 30days of the orders dismissing the defendants, not the final consent judgment. The trial court and the Court of Appeals dismissed Plaintiffs' appeal.

The Supreme Court granted certiorari on the question of whether Plaintiffs waived their right to appeal the February 16 2007 order by waiting to appeal until the entry of the final consent judgment. The Supreme Court held that the February 16 did not reserve all rights, claims, and liabilities in the case, and was thus interlocutory and not a final order. The February 16 order also did not affect a substantial right of Plaintiffs, and it was not certified for immediate appeal by the trial court, so Plaintiffs couldn't have successfully appealed it within 30 days of its entry. Defendants argued that Plaintiffs had to immediately appeal the order because the case involved title to land, which was a substantial right, but the Court said this was true only in the land condemnation context.

The Court concluded that because there was no final order in the case until the final consent judgment, and because Plaintiffs timely appealed the consent judgment, they did not waive their right to appeal previous orders in the case (including the February 16, 2007 order). The Court vacated the COA's dismissal of Plaintiffs' appeal and remanded for consideration on the merits.

New NC Supreme Court Opinions

2010-08-27T13:09:00.001-05:00

The NC Supreme Court handed down seven opinions today, five of them criminal. More on one of these cases shortly.

COA: Expert Witness Costs May Only Be Awarded If the Expert Was Under Subpoena (But Language in Scheduling Order Could Waive This Requirement)

2010-08-17T19:49:00.024-05:00

Today the COA held that in order to recover expert witness costs, the expert witness must be under subpeona. However, the Court indicated that this requirement could be waived by contrary language in a discovery scheduling order (IF the party contesting the subpoena requirement properly preserves that argument for appeal!). The case is Jarrell v. Charlotte-Mecklenburg Hospital Authority.

This case was a medical negligence action in which two doctors appeared as out-of-state expert witnesses on behalf of Defendants. Defendants were awarded costs associated with these witnesses (e.g., airfare and travel expenses).

Although the doctors were served with subpoenas to appear at the trial, the discovery scheduling order (DSO) in the case provided that any expert subpoenas "need not be issued" and the parties waived the statutory requirement that expert witnesses must be subpoenaed, "as it may affect the recovery of costs.” Even thought the COA acknowledged that "the express terms of the DSO would render inapplicable the statutory provisions detailing recovery of expert witness costs, the COA didn't consider the DSO because Plaintiffs failed to raise the issue in arguing against Defendants' motion for costs.

Plaintiffs argued that the award of costs was improper because the experts weren't properly subpoenaed. The COA noted that the trial court has explicit statutory authority to award as discretionary costs “[r]easonable and necessary fees of expert witnesses solely for actual time spent providing testimony at trial, deposition, or other proceedings" pursuant to N.C. Gen. Stat. § 7A-305(d)(11), and that this statute must be read in conjunction with N.C. Gen. Stat. § 7A-314, which governs subpoenas. N.C. Gen. Stat. § 7A-314 provides that only costs for “witness[es] under subpoena, bound over, or recognized” may be recovered. Thus, the COA reasoned, "§ 7A-314 limits the trial court’s broader discretionary power under § 7A-305(d)(11) to award expert fees as costs only when the expert is under subpoena."

The COA held that Plaintiffs had no standing to contest the validity of the subpoenas to the two doctors - only the non party witnesses whose attendance was sought could. The COA concluded that the statutory requirements for awarding expert witness fees as costs were satisfied.