Most Important Opinions first half of 2013

Administrative

Lobbying Statutes – Interpretation – ‘Acting in Concert’ – Ignorance of Principal

Mark Beason v. North Carolina Department of the Secretary of State (Lawyers Weekly No. 13-07-0302, 21 pp.) (Robert C. Hunter, J.) Appealed from Wake County Superior Court (Paul C. Ridgeway, J.) N.C. App.

Holding: The General Assembly gave the N.C. Ethics Commission – and not respondent – authority to interpret lobbying laws; therefore, respondent had no authority to interpret lobbying laws to encompass an “acting in concert” theory of liability.

We affirm the superior court’s order setting aside the civil fine assessment against petitioner.

Administrative

Lobbying Statutes – Direct Communication or Activities – Interpretation – Acting in Concert

Donald Beason v. North Carolina Department of the Secretary of State (Lawyers Weekly No. 13-07-0304, 21 pp.) (Robert C. Hunter, J.) Appealed from Wake County Superior Court (Paul C. Ridgeway, J.) N.C. App.

Holding: While the superior court found that petitioner never directly communicated with any individual on behalf of his alleged principals, the superior court failed to address whether petitioner engaged in lobbying “activities” on behalf of those principals.

We affirm in part and reverse and remand in part the superior court’s order setting aside the civil fine assessed against petitioner.

Administrative

Civil Practice – Mootness – Civil Penalties – Aggravation

Donald Beason v. North Carolina Department of the Secretary of State (Lawyers Weekly No. 13-07-0303, 15 pp.) (Robert C. Hunter, J.) Appealed from Wake County Superior Court (Paul C. Ridgeway, J.) N.C. App.

Holding: Petitioner asked the superior court to conclude that respondent lacked the authority to enhance civil fines using “aggravating” and “mitigating” factors pursuant to G.S. § 120C-602(b) and to enjoin respondent from enhancing civil fines with these factors. However, on administrative appeal, respondent fined petitioner without applying aggravating or mitigating factors; hence, the superior court correctly concluded that the questions originally in controversy between the parties were moot.

We affirm the superior court’s dismissal of the petition.

Administrative

Driver’s License Revocation – Rules of Evidence – DWI – Breath Test Refusal

Johnson v. Robertson (Lawyers Weekly No. 13-07-0491, 12 pp.) (Sanford L. Steelman Jr., J.) Appealed from Wake County Superior Court (Shannon R. Joseph, J.) N.C. App.

Holding: Under N.C. R. Evid. 1101, the Rules of Evidence apply “to all actions and proceedings in the courts of this State” and if otherwise provided by statute. Rule 1101 further provides that the Rules of Evidence do not apply in certain proceedings, including preliminary questions of fact, grand jury proceedings, sentencing hearings, probation revocation hearings, and probable cause hearings. Petitioner has cited no other statute that otherwise provides for the application of the Rules of Evidence to hearings pursuant to G.S. § 20-16.2. After reviewing applicable statutes, we hold the Rules of Evidence do not apply to DMV hearings held pursuant to § 20-16.2.

We affirm the superior court’s order upholding revocation of petitioner’s driver’s license.

Administrative

Lanham Act Preemption May Work in Ethanol Case 

American Petroleum Institute v. Cooper (Lawyers Weekly No. 13-01-0579, 36 pp.) (Agee, J.) No. 12-1078, June 6, 2013; USDC at Raleigh, N.C. (Flanagan, J.) 4^th Cir.

Holding: Plaintiff trade groups that represent the natural gas and oil industry who want to enjoin enforcement of North Carolina’s Ethanol Blending Statute get another chance to prove Lanham Act preemption; the 4^th Circuit agrees with the district court’s grant of summary judgment for defendants, the state and a marketing association, on plaintiffs’ preemption challenges under the Petroleum Marketing Practices Act and federal renewable fuel program, but says there are unresolved issues on plaintiffs’ Lanham Act preemption challenge.

Antitrust

Dental Board Action Violates Antitrust Law 

N.C. State Board of Dental Examiners v. Federal Trade Comm’n (Lawyers Weekly No, 13-01-0557, 37 pp.) (Shedd) No. 12-1172, May 31, 2013; On Petition for Review; 4^th Cir.

Holding: A state agency that regulates the practice of dentistry cannot overturn a Federal Trade Commission decision that the agency’s efforts to shut down teeth-whitening services performed by non-dentists constituted unfair competition that violated federal antitrust law; the 4^th Circuit rejects the state dentistry board’s petition for review of the FTC order.

Arbitration

Real Property – Title Insurance – Borrower – Statutory Violation Claims – Class Action

Hamilton v. Mortgage Information Services, Inc. (Lawyers Weekly No. 12-16-1252, 11 pp.) (Rick Elmore, J.) Appealed from Wake County Superior Court (Lucy N. Inman, J.) N.C. App. Unpub.

Holding: The plaintiff-borrower, who didn’t negotiate or sign the title insurance contract, is not bound by its arbitration clause when she sues for statutory violations.

We affirm the trial court’s denial of defendants’ motions to stay, to compel arbitration, and to decertify the plaintiff class.

Arbitration

Impossibility – AAA’s Policy on Healthcare – Tort/Negligence – Wrongful Death – Medical Malpractice

Crossman v. Life Care Centers of America, Inc. (Lawyers Weekly No. 13-07-0033, 11 pp.) (Linda Stephens, J.) Appealed from Henderson County Superior Court (Eric L. Levinson, J.) N.C. App.

Holding: Without a post-dispute agreement to arbitrate, the American Arbitration Association will not administer the parties’ healthcare dispute. Since the arbitration agreement at issue requires the use of “arbitrators selected from the American Arbitration Association,” the agreement sought to employ an organization that refuses to be so employed. This requirement constitutes an integral and material provision of the agreement. Accordingly, the agreement is unenforceable as impossible to perform.

We affirm the trial court’s denial of defendants’ motion to compel arbitration.

Arbitration

Contract – FAA – Choice of Law-  Physician-Patient Fiduciary Duty – Tort/Negligence – Medical Malpractice

King v. Bryant (Lawyers Weekly No.  13-07-0115, 17 pp.) Appealed from the Cumberland County Superior Court (Lucy N. Inman, J.) N.C. App.

Holding: An “Agreement to Arbitrate Dispute Resolution” will not fail for indefiniteness when portions of the agreement leave future decisions, such as selection of panel of arbitrators or procedural measures, to the arbitrator under the Federal Arbitration Act (FAA).

We reverse the order of the trial court denying defendants’ Motion to Enforce Arbitration Agreement and remand for proceedings.

Arbitration

Contract – Apparent Authority – Nursing Home – Daughter’s Signature – Wrongful Death – 12(b)(6) Standard

Bookman v. Britthaven, Inc. (Lawyers Weekly No. 13-16-0331, 11 pp.) (Martha A. Geer, J.) Appealed from Wilson County Superior Court (Milton F. Fitch Jr., J.) N.C. App. Unpub.

Holding: As defendant presented evidence that would allow, but not require, a finding that the decedent’s husband and daughter had apparent authority to agree to arbitration of disputes, the trial court was required to make findings of fact and conclusions of law resolving that issue.

We remand for further findings and conclusions on the issue of apparent authority. We dismiss defendant’s appeal of the trial court’s denial of its motion to dismiss.

Arbitration

Oral Agreement – Unsigned Draft – Attorneys – Partnership

Morton v. Ivey, McClellan, Gatton & Talcott, LLP (Lawyers Weekly No. 13-15-0411, 9 pp.) (James L. Gale, J.) 2013 NCBC 23

Holding: Even though the parties never signed their partnership agreement, there was a meeting of the minds as to its arbitration provision. The draft partnership agreement is a sufficient “record” to satisfy G.S. § 1-569.6(a).

Defendant’s motion to compel arbitration is granted.

Attorneys

Contract – Contingent Fee – Civil Practice – Standing – Intellectual Property – Patent – License or Sale – Tort/Negligence – Fiduciary Duty – Fraud

Priest v. Coch (Lawyers Weekly No. 13-05-0104, 13 pp.) (James L. Gale, J.) 2013 NCBC 6

Holding: The plaintiff-law firm has stated a claim for breach of the parties’ contingency fee contract. The complaint alleges that (1) the parties entered into an oral agreement later reduced to writing; (2) under the terms of the agreement, plaintiffs agreed to defer compensation for past, unpaid legal services and to continue to provide legal services in exchange for a one-quarter potential interest in the proceeds of a sale or license of defendants’ patent; (3) the parties agreed to split the expenses of the patent application on a pro rata basis; (4) subsequent to this agreement, defendants accepted plaintiffs’ services at no cost, and the parties otherwise conducted themselves according to these terms up to and until defendants realized proceeds from selling the patent; and (5) defendants have failed and refused to pay plaintiffs their agreed-upon portion of the net proceeds from the patent sale.

Defendants’ motion to dismiss is granted as to claims by the plaintiff-attorney individually and as to the law firm’s claims for breach of fiduciary duty, constructive fraud and unfair trade practices. The motion is denied as to the firm’s claims for breach of contract and fraud.

Attorneys

Domestic Relations – Contempt – Incarceration – Bankruptcy – Automatic Stay

In re Raprager (Lawyers Weekly No. 13-05-0105, 12 pp.) (Stephani W. Humrickhouse, J.) 12-06231-8; E.B.N.C.

Holding: After an ex-husband was incarcerated on contempt charges for failing to make payments required by a domestic relations consent order, he filed a bankruptcy petition. The ex-wife’s lawyer violated the automatic stay when she failed to take action to secure the ex-husband’s release from jail.

The ex-wife and her attorney willfully violated the automatic stay, and the ex-husband is entitled to sanctions against them, jointly and severally, in the amount of $9,356.41.

Attorneys

Firm Dissolution – Limited Liability Company Act – Asset Liquidation – Contingent Fee Contracts – First Impression

Mitchell, Brewer, Richardson, Adams, Burge & Boughman v. Brewer (Lawyers Weekly No. 13-15-0194, 19 pp.) (John R. Jolly Jr., Ch.J.) 2013 NCBC 14

Holding: When a law firm that was organized as a limited liability company splits up, contingent fee engagements are assets of the LLC. In order to liquidate the LLC, profits from the contingent fee engagements must be divided, based on the attorney-hours expended before and after the LLC’s dissolution.

The court appoints a special master to calculate the profits payable to the LLC’s former members.

Attorneys

Tort/Negligence – Legal Malpractice Claim – Civil Practice – Statute of Repose – Taxation

Carle v. Wyrick, Robbins, Yates & Ponton, LLP (Lawyers Weekly No. 13-07-0197, 18 pp.) (Donna S. Stroud, J.) Appealed from Wake County Superior Court (Edwin G. Wilson Jr., J.) N.C. App.

Holding: Even if plaintiffs’ cause of action did not accrue until the IRS issued a final assessment in 2010, and even though the defendant-attorneys continued to provide services to plaintiffs on related matters, since the attorneys’ role in plaintiffs’ business transaction – which resulted in their tax liability – was complete on June 10, 2005, plaintiffs’ Jan. 25, 2010 legal malpractice claim is barred by the four-year statute of repose.

We affirm the trial court’s grant of summary judgment to defendants.

Attorneys

Attorney-Client Privilege – Confidential Information – Bankruptcy – Trustee’s Subpoena – Deposition

Callaway v. Cofield (Lawyers Weekly No. 13-05-0399, 12 pp.) (Stephani W. Humrickhouse, J.) 12-00270-8; E.B.N.C.

Holding: An attorney who formerly represented a bankruptcy debtor may be deposed by the bankruptcy trustee. Issues of attorney-client privilege will be handled on a question-by-question basis, and the attorney is hereby ordered to respond to questions which involve confidential information that is not covered by the attorney-client privilege.

The attorney’s motion to quash the subpoena is denied.

Attorneys

Dual Representation – Bankruptcy – Adversary Proceeding

In re Gregory & Parker, Inc. (Lawyers Weekly No. 13-05-0401, 12 pp.) (Stephani W. Humrickhouse, J.) 12-01382-8; E.B.N.C.

Holding: Even if the debtor-corporation has claims against its principals (who have filed their own bankruptcy petition), the principals’ attorney may nevertheless represent both the principals and the corporation in this adversary action against a common creditor. The corporation’s general bankruptcy counsel can still pursue any causes of action that may materialize against the principals.

The court grants the debtor’s application to employ William Janvier and Janvier Law Firm, PLLC as counsel in its adversary proceeding against Conan McClain. Mr. McClain’s objection is overruled.

Attorneys

Tort/Negligence – Legal Malpractice – Civil Practice – Assignability of Claims – First Impression – Standing – Corporate Merger – Intellectual Property – Patent Registration

Revolutionary Concepts v. Clements Walker PLLC (Lawyers Weekly No. 13-07-0441, 21 pp.) (Robert C. Hunter, J.) Appealed from Mecklenburg County Superior Court (Ben F. Tennille & James L. Gale, JJ.) N.C. App.

Holding: Based on our courts’ treatment of the assignability of other personal tort claims, we adopt the majority view and conclude that malpractice claims are not assignable in North Carolina.

We reverse and remand the trial court’s 2010 order granting defendants’ motion to dismiss plaintiff Carter for lack of standing. We affirm the trial court’s grant of summary judgment as to plaintiff Revolutionary Concepts. We affirm the trial court’s order denying plaintiffs’ motions under N.C. R. Civ. P. 15 and 17.

Attorneys

Settlement Proceeds – Disbursement – Liability – First Impression – State Health Plan – Public Employees

State Health Plan for Teachers & State Employees v. Barnett (Lawyers Weekly No. 13-07-0442, 10 pp.) (Ann Marie Calabria, J.) Appealed from McDowell County Superior Court (Laura J. Bridges, J.) N.C. App.

Holding: Although the defendant-attorney was following his defendant-client’s instructions when he disbursed all of the settlement proceeds to her and none to plaintiff, under G.S. 135-45.15 (now § 135-48.37), the attorney must pay plaintiff’s lien.

We affirm judgment for plaintiff.

Attorneys

Criminal Contempt – Opportunity to Respond  – Cursing – Magistrate’s Office

In re Foster (Lawyers Weekly No. 13-16-0518, 19 pp.) (Martha A. Geer, J.) Appealed from Buncombe County Superior Court (James U. Downs, J.) N.C. App. Unpub.

Holding: While the magistrate warned the defendant-attorney about profanity at least twice, the magistrate never specifically informed the attorney about a looming contempt charge until she actually held the attorney in contempt. The attorney’s opportunity to be heard was only granted after the court had announced that she was being held in contempt.

We reverse the criminal contempt order.

Attorneys

Tort/Negligence – Legal Malpractice – Petition for Certiorari – First Impression – Civil Practice – Statutes of Limitations & Repose

Hackos v. Goodman, Allen & Filetti, PLLC (Lawyers Weekly No. 13-07-0606, 18 pp.) (Linda M. McGee, J.) Appealed from Durham County Superior Court (Elaine M. Bushfan, J.) N.C. App.

Holding: The only “act or omission” which occurred during the statute of limitations period was defendants’ failure petition the N.C. Supreme Court for review of this court’s rulings against plaintiff in her previous legal malpractice action. Since plaintiff fails to allege any contractual obligation requiring defendants to represent her beyond appeal to this court, defendants’ failure to file the petition did not constitute the last “act or omission” giving rise to plaintiff’s legal malpractice claim in the instant case. Therefore, plaintiff’s claim is time-barred.

We affirm the trial court’s grant of defendants’ motion to dismiss.

Bankruptcy

Civil Practice – Appeals – Stay Motion – Arbitration

Moses v. Cashcall, Inc. (Lawyers Weekly No. 13-05-0403, 8 pp.) (Randy D. Doub, J.) 12-00174-8; E.B.N.C.

Holding: The federal policy favoring arbitration is premised on the enforcement of contractual provisions between assenting parties; however, adversary proceedings such as this one were created by the Bankruptcy Code for the benefit ultimately of creditors of the estate; therefore, this adversary proceeding is not encompassed by the parties’ arbitration agreement.

The court denies the defendant-creditor’s motion to stay the adversary proceeding pending appeal.

Civil Practice

Foreign Judgments – Constitutional – Full Faith & Credit – Intrinsic Fraud – First Impression

DOCRX, Inc. v. EMI Services of NC, LLC (Lawyers Weekly No. 13-07-0034, 11 pp.) (Linda McGee, J.) Appealed from Stanly County Superior Court (W. David Lee, J.) N.C. App.

Holding: Although the Uniform Enforcement of Foreign Judgments Act and N.C. R. Civ. P. 60 would allow intrinsic fraud as a defense against a judgment from another state, the Full Faith and Credit Clause of the U.S. Constitution does not.

We vacate the trial court’s order denying plaintiff’s motion to enforce its Alabama judgment. Remanded for further proceedings.

Civil Practice

Costs – Previously Dismissed Plaintiffs – Subsequent Proceedings

Green v. Kearny (Lawyers Weekly No. 13-07-0109, 27 pp.) (Sam Ervin IV, J.) (Sanford L. Steelman Jr., J., concurring in part & dissenting in part) Appealed from Franklin County Superior Court (Henry W. Hight Jr., J.) N.C. App.

Holding: Although plaintiffs Alston and Kelly’s claims were dismissed in 2009, they are liable for the costs that the defendants incurred while defending against plaintiff Green’s remaining claims through 2011.

We affirm the trial court’s award of costs to defendants.

Civil Practice

Attorneys – Fair Debt Collection Practices Act – N.C. Collection Agency Act – Motions

Sadler v. Scott Lowery Law Office, P.C. (Lawyers Weekly No. 13-16-0151, 11 pp.) (John C. Martin, Ch.J.) Appealed from Cumberland County District Court (Kimbrell Kelly Tucker, J.) N.C. App. Unpub.

Holding: Since defendants sent their collection notices to plaintiff’s attorney, plaintiff’s attorney was capable of protecting him from defendants’ allegedly false representation. Where the 2011 communications showed that the last transaction at issue was in September 2007, any competent attorney would not be misled by defendants’ alleged failure to acknowledge that the debt might be barred by the statute of limitations; therefore, plaintiff does not have a valid claim under the federal Fair Debt Collection Practices Act.

We affirm summary judgment for defendants.

Civil Practice

Sovereign Immunity – Constitutional – Schools & School Boards – Fines

Richmond County Board of Education v. Cowell (Lawyers Weekly No. 3-07-0164, 17 pp.) (Douglas McCullough, J.) Appealed from Wake County Superior Court (W. Osmond Smith III, J.) N.C. App.

Holding: Sovereign immunity does not bar a school board’s challenge – brought under N.C. Const. art. IX, § 7 – to a 2011 statutory amendment, which requires that $50 be sent to the Department of Public Safety whenever someone is convicted of an improper equipment offense.

We affirm the trial court’s denial of defendants’ motion to dismiss on the basis of sovereign immunity. With regard to the other dismissal grounds argued by defendants, we dismiss defendants’ interlocutory appeal.

Civil Practice

Interlocutory Appeal – Domestic Relations – Parent & Child – Custody Order – Attorney’s Fee Issue – Undecided

Hausle v. Hausle (Lawyers Weekly No. 13-07-0305, 15 pp.) (Douglas McCullough, J.) Appealed from Pitt County District Court (W. Turner Stephenson III, J.) N.C. App.

Holding: The analysis of the attorney’s fee issue under G.S. § 50-13.6 entails a review of the merits of the case; in this case, the trial court reserved the issue of attorney’s fees for further proceedings and did not certify its custody order for immediate appeal. Therefore, this appeal is interlocutory.  Where the custody order does not place the well-being of the parties’ children at stake, it does not affect a substantial right.

Plaintiff appeals the denial of her motion to modify custody; we dismiss the appeal as interlocutory.

Civil Practice

Winning Party’s ESI Cost Recovery Limited 

The Country Vintner of North Carolina LLC v. E.&J. Gallo Winery Inc. (Lawyers Weekly No. 13-01-0421, 24 pp.) (Davis, J.) No. 12-2074, April 29, 2013; USDC at Raleigh, N.C. (Britt, J.) 4^th Cir.

Holding: In a wine wholesaler’s unfair practices lawsuit against Gallo Winery, the 4^th Circuit clarifies which electronically stored information (ESI) expenses are taxable under the federal taxation-of-costs statute, and upholds a district court decision refusing to award costs for a broad array of ESI-related costs and awarding the winning winery only $218.59 for TIFF and PDF production of documents, of the $111,047.75 in ESI costs claimed by Gallo.

Civil Practice

Jury & Jurors – Evidence – Exhibit – Deliberations – G.S. § 1-181.2 – First Impression

Redd v. WilcoHess, L.L.C. (Lawyers Weekly No. 13-07-0493, 8 pp.) (R. Christopher Dillon, J.) Appealed from Forsyth County Superior Court (Richard W. Stone, J.) On petition for rehearing. N.C. App.

Holding: In a matter of first impression, we hold that G.S. § 1-181.2 supersedes Nunnery v. Baucom, 135 N.C. App. 556, 521 S.E.2d 479 (1999) on the issue of when a jury can have access to an exhibit during deliberations. However, in this case, the trial court was still allowing the parties to be heard, as required by § 1-181.2, when the jury reached its verdict and withdrew its request to view surveillance video.

We grant plaintiff’s petition for rehearing. We replace Part II.B. of the opinion filed March 5, 2013; the remainder of that opinion stands. We find no prejudicial error.

Civil Practice

Statute of Limitations – Equitable Estoppel – Banks & Banking – Loan Promises

Ussery v. Branch Banking & Trust Co. (Lawyers Weekly No. 13-07-0497, 37 pp.) (Linda Stephens, J.) (R. Christopher Dillon, J., concurring in part & dissenting in part) Appealed from Richmond County Superior Court (W. David Lee, J.) N.C. App.

Holding: Plaintiff’s tort and contract claims arise from the defendant-bank’s failure to secure financing for plaintiff’s business, and those claims were filed outside their applicable statutes of limitations. However, there is a genuine issue of material fact as to whether the bank misled plaintiff into refraining from filing suit during the limitations period.

We reverse summary judgment for the bank.

Civil Practice

Continuance – Standard of Review – Default Judgment – Evidence – Discovery

Consoli v. Global Supply & Logistics, Inc. (Lawyers Weekly No. 13-16-0516, 18 pp.) (Linda Stephens, J.) Appealed from Mecklenburg County Superior Court (Richard Boner, J.) N.C. App. Unpub.

Holding: When a party moves for a continuance, we review the court’s ruling for abuse of discretion. We will review continuances granted by a trial court sua sponte, as occurred here, under the same standard.

We affirm the trial court’s judgment in favor of the plaintiffs.

Civil Practice

Res Judicata – Unplead Defense – Summary Judgment – No Prejudice – Expense – Two Dismissal Rule

Sasso v. Statesville Flying Service, Inc. (Lawyers Weekly No. 13-16-0523, 18 pp.) (Robert C. Hunter, J.) Appealed from Iredell County Superior Court (W. Erwin Spainhour, J.) N.C. App. Unpub.

Holding: Even though defendants failed to plead res judicata in their answers, they did raise the issue in their summary judgment motions. In this situation, the answers are “deemed amended”, and our review is de novo.

We adopt the reasoning of the Second, Sixth, Ninth and Tenth Circuits and conclude that litigation costs incurred by plaintiffs do not constitute grounds to prohibit the trial court from allowing defendants to raise the res judicata defense for the first time in their summary judgment motions.

We affirm summary judgment for defendants.

Civil Rights

Duke Lacrosse Players’ Claims Partially Survive 

Evans v. Chalmers (Lawyers Weekly No. 13-01-0009, 58 pp.) (Motz, J.) No. 11-1436, Dec. 17, 2012; USDC at Durham, N.C. (Beaty, J.) 4^th Cir.

Holding: Duke University lacrosse players who were wrongfully accused of rape of an exotic dancer hired for a team party may not pursue most of their claims under 42 U.S.C. § 1983 and state tort law against defendant police officers and city officials; the appellate court reverses denial of 1) all defendants’ motions to dismiss the federal claims against them, 2) the city’s motion for summary judgment as to the state common-law claims against it; and 3) the officers’ motions to dismiss all other state common-law claims; and 4) the court dismisses for lack of appellate jurisdiction the city’s appeal of the state constitutional claims against it; the only claims to advance are state common-law malicious prosecution claims alleged against two defendant officers.

Civil Rights

Search & Seizure – Bare-Chested TSA Protest 

Tobey v. Jones (Lawyers Weekly No. 13-01-0095, 44 pp.) (Gregory, J.) No. 11-2230, Jan. 25, 2013; USDC at Richmond, Va. (Hudson, J.) 4^th Cir.

Holding: A young man who protested TSA screening at Richmond International Airport by stripping down to running shorts to reveal the text of the Fourth Amendment across his bare chest may sue TSA officials for allegedly violating his First Amendment rights by calling airport security to arrest him; the 4^th Circuit upholds a district court decision finding plaintiff stated a First Amendment claim.

Civil Rights

Race Discrimination Claim – Municipal – Construction Contract – Past Work

Lanier Construction Co. v. City of Clinton (Lawyers Weekly No. 13-02-0175, 13 pp.) (Terrence W. Boyle, J.) 4:11-cv-36; E.D.N.C.

Holding: Although plaintiff, a minority-owned contractor, was the low bidder for a city construction project, the city manager questioned previous clients of both plaintiff and the second-lowest bidder, Paul Howard Construction Co. a non-minority-owned contractor. Since plaintiff had performed poorly in four of five previous contracts while Paul Howard Construction had performed well in its past four contracts, the defendant-city could determine that Paul Howard Construction was the lowest responsible bidder.

The court grants the city’s motion for summary judgment.

Civil Rights

Confederate Flag Shirt Ban Upheld 

Hardwick v. Heyward (Lawyers Weekly No. 13-01-0289, 28 pp.) (Shedd, J.) No. 12-1445, March 25, 2013; USDC at Florence, S.C. (Wooten, J.) 4^th Cir.

Holding: The 4^th Circuit upholds a decision by South Carolina public school officials to prohibit a student from wearing Confederate flag shirts to school, as defendant school officials complied with U.S. Supreme Court requirements for regulating student speech.

We conclude the school officials complied with the requirements for regulating student speech as established in Tinker v. Des Moines Indep. Comm. Schl. Dist., 393 U.S. 503 (1969), and that the school dress codes and their enforcement did not violate the 14^th Amendment.

Civil Rights

Attorney’s Fee Motion – Elections – Matching Funds Statute – Prior Unsuccessful Lawsuit – First Impression – Computer Research

North Carolina Right to Life Political Action Committee v. Leake (Lawyers Weekly No. 13-02-0341, 16 pp.) (James E. Gates, USMJ) 5:11-cv-00472; E.D.N.C.

Holding: On their second try, plaintiffs were successful in having matching-funds legislation struck down. Although plaintiffs are entitled to an award of fees for their attorneys’ work on the current lawsuit, they are not entitled to fees incurred in their earlier unsuccessful lawsuit. Work on the prior lawsuit did not sufficiently contribute to the current lawsuit.

Plaintiffs’ motion for fees and costs is allowed in the amount of $52,426.91.

Constitutional

Freedom of Religion – Marriage – Civil Rights – ‘Person’

Thigpen v. Cooper (Lawyers Weekly No. 13-07-0213, 20 pp.) (Martha A. Geer, J.) Appealed from Guilford County Superior Court (Judson D. DeRamus Jr., J.) N.C. App.

Holding: Plaintiffs challenge the constitutionality of several N.C. marriage statutes pursuant to 42 U.S.C. § 1983; however, the state is not a “person” within the meaning of § 1983. Plaintiffs have sued the attorney general in his official capacity only, and they have made no showing that the attorney general plays any role in the enforcement of the statutes they challenge; consequently, plaintiffs have failed to demonstrate that the attorney general has engaged in an ongoing violation of the U.S. Constitution and therefore not established that he is a “person” for purposes of § 1983.

We affirm the trial court’s order granting defendants’ motion to dismiss.

Contract

Workers’ Compensation – Settlement Agreement – REDA Claim – Novel Issue – Civil Practice – Discovery

Anderson v. FMC Corp. (Lawyers Weekly No. 13-04-0300, 22 pp.) (David C. Keesler, USMJ) 3:10-cv-00475; W.D.N.C.

Holding: Without a case precisely on point, the court declines to rule that it lacks subject matter jurisdiction over the defendant-employer’s claim that, in this action under the Retaliatory Discrimination Act, plaintiff has breached the agreement that settled his workers’ compensation claim.

Plaintiff’s motion to dismiss defendant’s breach of contract claim is denied. Defendant’s motion for summary judgment on plaintiff’s REDA claim is denied. Defendant’s motion for discovery sanctions is granted in part.

Contract

Private University – Disciplinary Proceedings

Samost v. Duke University (Lawyers Weekly No. 13-07-0370, 33 pp.) (Sam Ervin IV, J.) (Robert C. Hunter, J., dissenting) Appealed from Durham County Superior Court (Orlando F. Hudson Jr., J.) N.C. App.

Holding: Even if the “Bulletin of Duke University, The Duke Community Standard in Practice: A Guide for Undergraduates” was a contract between Duke and its students, plaintiffs cannot show that Duke breached the Bulletin’s terms because plaintiffs filed suit instead of allowing the disciplinary process to continue to completion.

We affirm the trial court’s grant of Duke’s motion for judgment on the pleadings.

Contract

CSX Did Not Spell Out Carmack Limitation 

ABB Inc. v. CSX Transportation Inc. (Lawyers Weekly No. 13-01-0580, 40 pp.) (Keenan, J.) No. 12-1674, June 7, 2013; USDC at Raleigh, N.C. (Fox, J.) 4^th Cir.

Holding: Rail carrier CSX Transportation Inc. is liable for the full $550,000 in damage to a $1.3 million electrical transformer shipped from St. Louis to Pittsburgh, and the district court erred in holding that the parties had limited CSX’s potential liability in the bill of lading to $25,000; the 4^th Circuit says the parties did not modify the carrier’s liability exposure, as permitted by the Carmack Amendment to the Interstate Commerce Act, and vacates the judgment limiting CSX’s liability to $25,000.

Corporate

Tort/Negligence – Breach of Fiduciary Duty – Directors – Colorado Law – Bankruptcy

Angell v. Accugenomics, Inc. (In re Gene Express, Inc.) (Lawyers Weekly No. 13-05-0408, 16 pp.) (J. Rich Leonard, J.) 12-00284-8; E.B.N.C.

Holding: As non-management directors, defendants Antonucci, LoRusso and Pyles were not expected to devote all their time and attention to the debtor; however, they were made aware of threats posed by Stephen Kallabis and his efforts to divest shareholders of their interests and realize the debtor’s operations and intellectual property for himself. Defendants’ failure to take any action to ensure the debtor’s continued viability, their inattention to the debtor’s operations, and the failure to appropriately monitor Alfred Pollack’s activities as chairman were substantial factors contributing to the damages suffered by the debtor. The trustee has stated a claim for breach of fiduciary duty against defendants under Colorado law.

Defendants’ motion to dismiss is denied.

Criminal Practice

Constitutional – Sex Offender – Place Where Children Gather – Vague

State v. Daniels (Lawyers Weekly No. 13-07-0017, 26 pp.) (Cressie H. Thigpen Jr., J.) Appealed from Dare County Superior Court (Wayland J. Sermons Jr., J.) N.C. App.

Holding: The phrase “at any place” in G.S. § 14-208.18(a)(3) is unconstitutionally vague as applied to defendant with regard to his activities on May 6 and 7, 2009. A person of ordinary intelligence would not necessarily know the statute prohibited defendant – a registered sex offender – from being “out kind of close to the parking lot or that little dirt road area” between a children’s ballpark and the road (on May 6) or from being on an adult softball field adjacent to a tee ball field (on May 7).

We affirm the part of the trial court’s order declaring § 14-208.18(a)(3) unconstitutionally vague as applied. We vacate the part of the trial court’s order.

Criminal Practice

Juvenile – Confession – Miranda – 13-Year-Old – Driving Without a License – Reckless & Unauthorized Driving

In re A.N.C. (Lawyers Weekly No. 13-07-0112, 21 pp.) (Sam Ervin IV, J.) Appealed from Forsyth County District Court (Denise S. Hartsfield, J.) N.C. App.

Holding: Even though state law requires the driver of a vehicle to stay with the vehicle after an accident, this did not mean the juvenile was in custody when an officer questioned him while investigating the accident. The officer’s testimony that the juvenile acknowledged having driven the vehicle involved in the accident was not admitted in violation of G.S. § 7B-2101 or Miranda.

We affirm the adjudication of delinquency on the charge of operating a motor vehicle without being properly licensed to do so. We reverse the delinquency adjudication on the charges of unauthorized use of a motor vehicle and reckless driving.

Criminal Practice

Constitutional – Delegation of Legislative Authority – Sex Offender Registration – Federal Statutes

In re McClain (Lawyers Weekly No. 13-07-0365, 11 pp.) (John C. Martin, Ch.J.) Appealed from New Hanover County Superior Court (Walter H. Godwin Jr., J.) N.C. App.

Holding: The General Assembly did not unconstitutionally delegate its legislative authority when it made relief from sex offender registration dependent, in part, upon compliance with “the federal Jacob Wetterling Act, as amended, and any other federal standards applicable to the termination of a registration requirement or required to be met as a condition for the receipt of federal funds by the State.” G.S. § 14-208.12A(a1)(2).

We affirm the trial court’s denial of petitioner’s petition for removal from the sex offender registry.

Criminal Practice

Constitutional – Speedy Trial – DWI – Right to Confront Adverse Witnesses

State v. Sheppard (Lawyers Weekly No. 13-16-0180, 15 pp.) (Sanford L. Steelman Jr., J.) Appealed from Forsyth County Superior Court (Joseph E. Turner, J.) N.C. App. Unpub.

Holding: Even though a prosecution witness was on secured leave during some of the delay leading up to defendant’s trial, that delay is counted against the state, not against defendant. Defendant cannot be required to surrender one constitutional right (the right to a speedy trial) in order to assert another (the right to confront the witnesses against her).

We affirm the superior court’s order granting defendant’s motion to dismiss the DWI charge against her based on a violation of her right to a speedy trial.

Criminal Practice

Murder – Shooting Pregnant Wife – Premature Birth – Death from Complications – Attempted Murder

State v. Broom (Lawyers Weekly No. 13-07-0046, 21 pp.) (Robert C. Hunter, J.) Appealed from Alamance County Superior Court (J.B. Allen Jr., J.) N.C. App.

Holding: The state presented evidence that defendant’s premeditated shooting of his 27-week-pregnant wife ruptured her colon, placing both mother and child in danger and necessitating a Caesarian section. A month later, the baby died of a condition that doctors only know to be caused by premature birth. Given other evidence that defendant did not want the child, the state’s evidence was sufficient to prove defendant’s intent to kill the baby.

We find no error in defendant’s conviction of the first-degree murder of the baby, Lillian, and his attempted murder of his wife, Danna.

Criminal Practice

Constitutional – Right to Counsel – Ineffective Assistance – Waiver – Representation

State v. Gray (Lawyers Weekly No. 13-07-0126, 17 pp. (Sam Irvin IV, J.) Appealed from Forsyth County Superior Court (William R. Pittman, J.)  N.C. App.

Holding: Even though the defendant’s attorney attained a consent waiver from a former client who testified during his current client’s trial, and even though the State Bar said this was all that was required, the defendant is granted a new trial based on his objection to continuing representation by his appointed counsel and his refusal to waive attorney conflict of interest.

Defendant is entitled to a new trial.

Criminal Practice

Controlled Substances Act – Prescription Drugs – ‘Mixture’

State v. Ellison (Lawyers Weekly No. 13-06-0223, 15 pp.) (Paul M. Newby, J.) (Cheri Beasley, J., not participating) (Robin E. Hudson, J., joined by Barbara Jackson, J., concurring in the result only) Appealed from Ashe County Superior Court (Anderson D. Cromer, J.) On discretionary review from the Court of Appeals. N.C. S. Ct.

Holding: Since prescription pills are “mixtures”, they are covered by the opium trafficking statute, G.S. § 90-95(h)(4).

We affirm the Court of Appeals’ decision that defendants were subject to conviction under § 90-95(h)(4).

Criminal Practice

Sentencing – Restitution – Bankruptcy Fraud – Trustee Victim – First Impression

United States v. Coats (Lawyers Weekly No. 13-02-0246, 14 pp.) (Louise W. Flanagan, J.) 5:11-cr-00373; E.D.N.C.

Holding: The court agrees with the Fifth, Seventh, and Eighth Circuits that a bankruptcy trustee can be a victim for purposes of the Mandatory Victim Restitution Act; however, only the trustee’s expenses in unraveling defendant’s bankruptcy fraud – and not expenses related to having his bankruptcy petition denied – are losses within the meaning of the MVRA.

Although the government requests restitution in excess of $40,000, the court allows restitution only in the amount of $3,000.

Criminal Practice

Va. Anti-Sodomy Statute Overturned 

MacDonald v. Moose (Lawyers Weekly No. 13-01-0270, 30 pp.) (King, J.) No. 11-7427, March 12, 2013; USDC at Alexandria, Va. (Lee, J.) 4^th Cir.

Holding: A 47-year-old man convicted of criminal sexual solicitation of a 17-year-old woman based on his solicitation of an act of sodomy under Va. Code § 18.2-361(A) wins habeas relief in the 4^th Circuit, as the federal appellate court declares Virginia’s anti-sodomy statute unconstitutional.

Criminal Practice

Constitutional – Due Process – Stalking – Amended Statute – Jury Instruction – First Impression – DVPO Violation – ‘Stay Away’

State v. Williams (Lawyers Weekly No. 13-07-0323, 35 pp.) (Donna S. Stroud, J.) Appealed from Wake County Superior Court (Michael J. O’Foghludha, J.) N.C. App.

Holding: During the time that defendant was allegedly stalking the victim, the stalking statute was amended to make it easier for the state to prove mens rea; therefore, the amendment cannot be applied retroactively. The trial court should have asked the jury for a special verdict and instructed the jury that it must decide whether the state had proven that defendant committed a criminal act after the effective date of the amendment.

Defendant is entitled to a new trial on the stalking charge. We reverse the trial court’s denial of defendant’s motion to dismiss the charge of violating a domestic violence protective order.

Criminal Practice

Sex Offender Registry – Termination – State’s Appeal

In re Bunch (Lawyers Weekly No. 13-07-0488, 11 pp.) (Donna S. Stroud, J.) Appealed from Cleveland County Superior Court (Forrest D. Bridges, J.) N.C. App.

Holding: The state argues on appeal that the trial court exceeded its authority when it terminated the sex offender registration requirement for a petitioner who had not been on the N.C. sex offender registry for at least 10 years (on the grounds that petitioner was never required to register in North Carolina in the first place); however, at the trial court level, the state merely stood silent. The state has failed to preserve its arguments for appeal.

The state’s appeal is dismissed.

Domestic Relations

Civil Practice – Contempt – Parent & Child – Visitation – Ex-Convict Brother – Attorney’s Fees

Baines v. Baines (Lawyers Weekly No. 13-16-0224, 11 pp.) (Robert C. Hunter, J.) Appealed from Durham County District Court (James T. Hill. J.) N.C. App. Unpub.

Holding: Plaintiff’s brother came to live with him; the brother had a history of drug abuse and a criminal history from crimes committed in support of his drug addiction, he was on probation at the time he went to live with plaintiff, and he was arrested for a probation violation but was released to reside with plaintiff. Nevertheless, the defendant-mother willfully violated the consent visitation order when she refused to allow visitation and unilaterally imposed extra conditions on plaintiff’s exercise of his visitation rights.

We affirm the trial court’s order finding defendant in contempt. However, we reverse the order awarding plaintiff attorney’s fees.

Domestic Relations

Parent & Child – Support – Imputed Income – No Bad Faith Findings – Health Insurance – Step-Parent

Ludlam v. Miller (Lawyers Weekly No. 13-07-0116, 27 pp.) (Linda M. McGee, J.) Appealed from Guilford County District Court (Susan E. Bray, J.) N.C. App.

Holding: The trial court did “not find that either party has acted in bad faith in having been voluntarily unemployed or that either party has [deliberately] suppressed his or her income to avoid a support obligation to the extent that the court should impute income to each party at a prior income level….” This finding did not justify the trial court’s decision to impute a minimum-wage income to both parents.

Domestic Relations

Neglect Adjudication – Visitation – Skype

In re T.R.T. (Lawyers Weekly No. 13-07-0162, 16 pp.) (Douglas McCullough, J.) Appealed from New Hanover County District Court(J.H. Corpening II, J.) N.C. App.

Holding: In a parental neglect proceeding, the generic visitation provision in G.S. § 50-13.2(e) applies. Skype is a form of video teleconferencing; as such, it may supplement but not replace in-person visitation.

We affirm the adjudication of neglect but reverse the trial court’s visitation order and remand for further proceedings.

Domestic Relations

Separation Agreement – Unincorporated – Breach of Contract – Specific Performance Clause – First Impression – Ability to Perform

Reeder v. Carter (Lawyers Weekly No. 13-07-0309, 19 pp.) (Robert N. Hunter Jr., J.) Appealed from Randolph County District Court (Robert M. Wilkins, J.) N.C. App.

Holding: Even though the parties’ separation agreement says they are entitled to enforce it by specific performance, parties may not contract around an established legal standard. The specific performance clause in the separation agreement does not negate plaintiff’s burden of proving the equitable requirements for specific performance.

We affirm the trial court’s denial of plaintiff’s request for specific performance.

Domestic Relations

Civil Contempt – Equitable Distribution – Arbitration Award – Equity Line Withdrawals – Attorney’s Fee Award

Booe v. Booe (Lawyers Weekly No. 13-16-0515, 9 pp.) (Martha A. Geer, J.) Appealed from Cabarrus County District Court (Martin B. McGee, J.) N.C. App. Unpub.

Holding: In the arbitrator’s equitable distribution award, the sale of marital property was expedited in part because of the already substantial size of the debt owed on the home equity line of credit. The defendant-husband’s further increasing that debt was not consistent with the intent of the arbitrator’s award.

We affirm the trial court’s order holding the husband in contempt. We reverse the award of attorney’s fees and remand for further findings.

Domestic Relations

Parent & Child – Juvenile – Voluntary Dismissal – First Impression

In re E.H. (Lawyers Weekly No. 24-07-0542, 22 pp.) (Donna S. Stroud, J.) Appealed from Buncombe County District Court (Ward D. Scott, J.) N.C. App.

Holding: After a county Department of Social Services files a juvenile petition, the DSS has the authority to voluntarily dismiss the petition, and the guardian ad litem is not entitled to relief from the dismissal.

We affirm the trial court’s denial of the guardian ad litem’s motion for relief from DSS’s voluntary dismissal without prejudice.

Domestic Relations

Civil Practice – Appeals – Final Order – Attorney’s Fees

Duncan v. Duncan (Lawyers Weekly No. 13-06-0596, 4 pp.) (Paul M. Newby, J.) (Cheri Beasley, J., not participating) Appealed from Macon County District Court (Monica Leslie, Steven J. Bryant & Richard K. Walker, JJ.) On discretionary review from the Court of Appeals. N.C. S. Ct.

Holding: An order that completely decides the merits of an action constitutes a final judgment for purposes of appeal even when the trial court reserves for later determination collateral issues such as attorney’s fees and costs.

We reverse the Court of Appeals’ dismissal of defendant’s appeal as interlocutory. We remand for consideration of the remaining issues.

We disavow any language in Bumpers v. Community Bank of Northern Virginia, 364 N.C. 195, 695 S.E.2d 442 (2010), that may be read to conflict with our holding in the case at hand.

Intellectual Property

Trademark Infringement & Unfair Trade Practices – Surname – Business Sale – Subsequent Use – Same Locality – Civil Practice – Preliminary Injunction

SCI North Carolina Funeral Services, LLC v. McEwen Ellington Funeral Services, LLC (Lawyers Weekly No. 13-15-0183, 20 pp.) (Calvin E. Murphy, J.) 2013 NCBC 11

Holding: While a surname may not be trademarked, a subsequent user may not use the same name in the same locality as an original user with the intent to injure the original user or to fraudulently avail itself of the original user’s good name and reputation.

Defendants are preliminarily enjoined from operating McEwen Ellington Funeral Services in Charlotte, Mint Hill, Pineville and Monroe.

Labor & Employment

ERISA – 401(k) Fund – Tort/Negligence – Breach of Fiduciary Duty – Corporate

Tatum v. R. J. Reynolds Tobacco Co. (Lawyers Weekly No. 13-03-0232, 77 pp.) (N. Carlton Tilley, Sr.J.) 1:02-cv-00373; M.D.N.C.

Holding: Even though defendant breached its fiduciary duty by deciding to eliminate Nabisco stock from its 401(k) plan without sufficiently investigating the decision, a prudent fiduciary could have made the same decision after an appropriate investigation.

Judgment for defendant.

Labor & Employment

Public Employees – Civil Rights – Personnel File – Police Officer – IA Complaints

Wind v. City of Gastonia (Lawyers Weekly No. 13-07-0261, 38 pp.) (John C. Martin, Ch.J.) (Chris Dillon, J., concurring in part & dissenting in part) Appealed from Gaston County Superior Court (Forrest Donald Bridges, J.) N.C. App.

Holding: After investigating complaints lodged against the plaintiff-police officer, the police chief found the complaints were not sustained; therefore, the investigations did not result in a change in plaintiff’s employment. Nevertheless, the chief made official personnel decisions to dismiss the complaints, so plaintiff has a statutory right to inspect the investigation files, including the names of the complainants.

We affirm summary judgment for plaintiff and remand for further proceedings.

Labor & Employment

Temp Agency – Contract – Covenant Not to Compete – Public Policy Violation – Unfair Trade Practices Claim – Billing Error

Phelps Staffing, LLC v. C. T. Phelps, Inc. (Lawyers Weekly No. 13-07-0369, 16 pp.) (Robert C. Hunter, J.) Appealed from Franklin County Superior Court (Howard E. Manning Jr., J.) N.C. App.

Holding: The trial court correctly found a public policy violation in the plaintiff-temp agency’s contract with its employees; the contract prohibited plaintiff’s employees from discussing or accepting employment at plaintiff’s clients where the employee had been placed for work by plaintiff. Plaintiff admitted that its primary purpose in requiring job applicants to execute the non-competition agreement was to prevent its employees from going to work for another temp agency.

We affirm summary judgment for defendants.

Labor & Employment

Civil Rights – Disability Discrimination – Glaucoma – Teaching Assistant – Bus Driving Duties – Schools & School Boards

Bordonaro v. Johnston County Board of Education (Lawyers Weekly No. 13-02-0382, 9 pp.) (Terrence W. Boyle, J.) 5:12-cv-00683; E.D.N.C.

Holding: Under the more liberal standards of the Americans with Disabilities Act Amendments Act (ADAAA), the plaintiff-teaching assistant’s alleged loss of peripheral vision may qualify as a disability.

Defendant’s motion to dismiss is denied.

Labor & Employment

ERISA Plan Covers Drunken Driver Death 

Johnson v. American United Life Ins. Co. (Lawyers Weekly No. 13-01-0531, 25 pp.) (Traxler, J.) No. 12-1381, May 24, 2013; USDC at Greensboro, N.C. (Auld, USMJ.) 4^th Cir.

Holding: Because an employee’s ERISA plan does not define “accident” for coverage of accidental death and dismemberment benefits, the 4^th Circuit construes the plan in favor of coverage and says the widow of an employee with a .289 blood alcohol content who died in a one-vehicle accident is entitled to coverage for both AD&D benefits and life insurance under the employer’s ERISA plan.

Labor & Employment

NLRB’s Notice-Posting Rule Invalidated 

Chamber of Commerce of the U.S. v. NLRB (Lawyers Weekly No. 13-01-0622, 35 pp.) (Duncan, J.) No. 12-1757, June 14, 2013;USDC at Charleston, S.C. (Norton, J.) 4^th Cir.

Holding: The National Labor Relations Board did not have authority to promulgate a rule requiring employers to post a notice of employee rights under the National Labor Relations Act, and the 4^th Circuit upholds summary judgment for the U.S. Chamber of Commerce and other business groups that challenged the rule.

Municipal

Ordinances – Towing – General Police Power – Cell Phone Usage – Ripeness

King v. Town of Chapel Hill (Lawyers Weekly No. 13-07-0546, 32 pp.) (Linda Stephens, J.) Appealed from Orange County Superior Court (Orlando F. Hudson Jr., J.) N.C. App.

Holding: Since G.S. § 160A-174(a)’s grant of general ordinance-making power is ambiguous, we apply G.S. § 160A-4 and broadly construe the defendant-town’s authority to regulate the towing business.

We reverse the trial court’s grant of judgment in favor of plaintiff.

Prisons & Jails

Criminal Practice – Sentencing – Constitutional – Life Sentence – Prior Statute – Earned Time Credits

Lovette v. North Carolina Department of Correction (Lawyers Weekly No. 13-06-0219, 2 pp.) (Per Curiam) Appealed from Wake County Superior Court (Allen Baddour, J.) On appeal from the Court of Appeals. N.C. S. Ct.

Holding: In his dissent, Judge Ervin reasoned that the analysis in Jones v. Keller, 364 N.C. 249, 698 S.E.2d 49 (2010), applied to life sentences imposed under former G.S. 14-2 for crimes other than murder; despite the former statutory definition of a life term as 80 years’ imprisonment, a lifer’s earned time credits do not apply to reduce the time to be served on his sentence. Given that the DOC has interpreted its regulations as permitting the award of different types of time for certain purposes and has, in fact, awarded those credits to petitioners for those purposes, petitioners have received the awards to which they are entitled for the purposes for which they are entitled, and have not, under the logic of Jones, been deprived of a constitutionally protected liberty interest.

For the reasons stated in the dissenting opinion, we reverse the decision of the Court of Appeals and remand for further proceedings.

Public Utilities

Water & Sewer – Private Utility Sale – Gain on Sale – Allocation to Customers – Municipal

State ex rel. Utilities Commission v. Carolina Water Service, Inc. of North Carolina (Lawyers Weekly No. 13-07-0044, 30 pp.) (Linda Stephens, J.) Appealed from the Utilities Commission. N.C. App.

Holding: Since 1994, the Utilities Commission has followed a policy of assigning 100 percent of the gain on sale to shareholders when a private utilities company sells its system to a municipality. In this case, the Commission reasonably chose to make an exception to that policy when a private utility, Carolina Water Service, Inc. of North Carolina (CWSNC) with a stagnant customer base sold a significant portion of its system to a municipality, leaving the rest of CWSNC’s customers with a projected increase in both water and sewer rates with no relief in sight.

We affirm the decision of the Utilities Commission to allocate 17.5 percent, or $3.36 million, to CWSNC’s customers, with the remaining $15.83 million sale price going to CWSNC’s shareholders.

Real Property

Mortgages – Lien Priority – G.S. § 45-36.24(b) – Unconstitutional as Applied – Impairment of Contracts

Falk v. Fannie Mae (Lawyers Weekly No. 13-07-0200, 21 pp.) (Douglas McCullough, J.) Appealed from Guilford County Superior Court (Lindsay R. Davis Jr., J.) N.C. App.

Holding: Where G.S. § 45-36.24(b) was enacted after plaintiff recorded its deed of trust, and where application of the statute would cause plaintiff’s lien to expire, the statute is unconstitutional as applied in this case.

We reverse summary judgment for defendant and remand to allow plaintiff to foreclose on its deed of trust.

Real Property

Mortgages – Transfer – ‘Mere Stamp’ – Indorsement – Foreclosure

In re Foreclosure of Bass (Lawyers WeeklyNo. 13-06-0221, 11 pp.) (Mark Martin, J.) (Cheri Beasley, J., not participating) Appealed from Durham County Superior Court (Abraham Penn Jones, J.) On discretionary review from the Court of Appeals. N.C. S. Ct.

Holding: Even though it does not identify the individual making the transfer, a stamp transferring the homeowner’s deed of trust from Mortgage Lenders to Emax Financial Group constitutes a signature within the meaning of the Uniform Commercial Code.

We reverse the Court of Appeals’ decision, which upheld the trial court’s dismissal of this foreclosure proceeding.

Real Property

Mortgages – Foreclosure – Guarantor – Offset Defense – Maker Only

Wells Fargo Bank, N.A. v. Arlington Hills of Mint Hill, LLC (Lawyers Weekly No. 13-07-0260, 11 pp.) (Douglas McCullough, J.) Appealed from Mecklenburg County Superior Court (W. Robert Bell, J.) N.C. App.

Holding: Although the defendant-guarantor was liable on the underlying debt and held a property interest in the mortgaged property, since he was not the “mortgagor, trustor or other maker” of the obligation, he is not eligible for the offset defense set out in G.S. § 45-21.36.

We affirm summary judgment in favor of the plaintiff-bank.

Real Property

Torrens Act – Civil Practice – Collateral Estoppel – Contempt

Adams Creek Associates v. Davis (Lawyers Weekly No. 13-07-0537, 34 pp.) (Douglas McCullough, J.) Appealed from Carteret County Superior Court (Benjamin G. Alford, J.) N.C. App.

Holding: A previous proceeding under the Torrens Act resulted in a final judgment on the merits as to title in the waterfront property at issue in this case; the very nature of adverse possession necessarily decides any issue of lappage (an overlap in the property described in deeds of competing claimants); and the parties to the current action are in privity with the named parties in the Torrens proceeding. Therefore, the doctrine of collateral estoppel bars defendants from asserting the issue of lappage to re-litigate title to the waterfront property.

We affirm the trial court’s rulings in favor of plaintiffs.

Real Property

Contract – Mutual Mistake of Fact Defense – No Mistake – Mortgages

Teague v. Forbes (Lawyers Weekly No. 13-16-0625, 15 pp.) (Linda Stephens, J.) Appealed from Pasquotank County Superior Court (Walter H. Godwin Jr., J.) N.C. App. Unpub.

Holding: The plaintiff-sellers and their agents correctly informed the defendant-buyers that there was a mortgage lien on 0.7 unimproved acres of the 1.36-acre tract plaintiffs were selling. Although the bank asserted – ultimately unsuccessfully – a lien on the entire tract, the bank’s mistaken belief did not make plaintiffs’ representation untrue.

We affirm summary judgment for plaintiffs.

Schools & School Boards

Labor & Employment – Public Employees – Physical Force – Against a Student – Bomb Threat – Disruptive Behavior

Diamond v. Charlotte-Mecklenburg County Board of Education (Lawyers Weekly No. 13-07-0432, 13 pp.) (Wanda G. Bryant, J.) Appealed from Mecklenburg County Superior Court (A. Robinson Hassell, J.). N.C. App.

Holding: Even though the former G.S. § 115C-391(a) permitted the use of force against a student “to maintain order,” when read in the context of the entire statute, it is clear that physical force may be used against a student only in exigent circumstances. Although a student was being disruptive during a bomb threat, all the students had been successfully moved to the school’s track and field area and were in no immediate danger; further, the unruly student’s actions did not create or magnify any safety threat. Therefore, the defendant-school board properly applied § 115C-391 in determining that the statutory exception did not apply to petitioner’s use of physical force against the student.

We affirm the superior court’s dismissal of petitioner’s petition for judicial review of the school board’s decision to terminate her position.

Securities

NCSA – First Impression – Real Property – Securitized Interests – Secondary Liability

NNN Durham Office Portfolio 1, LLC v. Highwoods Realty Ltd. Partnership (Lawyers Weekly No. 13-15-0182, 39 pp.) (James L. Gale, J.) 2013 NCBC 12

Holding: Where plaintiffs allege that they pooled their money in a common investment – real property subject to commercial leases – with an expected return common to all based on the success of a third party, plaintiffs have alleged an investment contract, which is a “security” within the meaning of the N.C. Securities Act. The defendant-seller and its defendant-real estate agent may have secondary liability for a violation of the NCSA.

Defendants’ motion to dismiss is granted in part, denied in part.

Taxation

Hotel Occupancy Tax – Online Booking Companies – Not ‘Operators’ – Contract – Tort/Negligence

Wake County v. Hotels.com, L.P. (Lawyers Weekly No. 13-15-0022, 31 pp.) (Calvin E. Murphy, J.) 2012 NCBC 61

Holding: The defendant-online booking companies are not hotel “operators” within the meaning of the enabling statutes or the ordinances that establish the plaintiff-counties’ hotel occupancy taxes. Therefore, defendants are not required to pay the occupancy taxes to the counties.

Summary judgment for defendants.

Taxation

Constitutional – Foreign Trust – N.C. Beneficiaries – Commerce Clause & Due Process – First Impression

Kimberly Rice Kaestner 1992 Trust v. North Carolina Department of Revenue (Lawyers Weekly No. 13-15-0157, 7 pp.) (John R. Jolly Jr., Ch.J.) 2013 NCBC 9

Holding: The court can find no binding case law upholding the constitutionality of G.S. § 105-160.2, so there is at least a colorable argument that North Carolina’s imposition of a tax on a foreign trust based solely on the presence of a beneficiary in the state does not conform to the Due Process Clause, the Commerce Clause, or N.C. Const. art. 1, § 19.

The court denies defendant’s motion to dismiss plaintiff’s constitutional claims. The court grants defendant’s motion to dismiss plaintiff’s claim for injunctive relief.

Taxation

Income – State of Residence – Move to Florida – N.C. Home & Employment

Fowler v. North Carolina Department of Revenue (Lawyers Weekly No. 13-09-0173, 20 pp.) (Beecher R. Gray, ALJ) 11 REV 14832

Holding: Petitioners’ sale of their N.C. business, purchase of a Florida home, and numerous official acts (registering to vote in Florida, removing their names from N.C. voter rolls, registering cars in Florida, listing Florida as their residence on tax forms, obtaining Florida drivers’ licenses and turning in their N.C. drivers’ licenses, etc.) changing their residence to Florida evidenced plaintiffs’ intent to make Florida their home.

Petitioners were not residents of North Carolina between Jan. 19, 2006 and the end of 2007; therefore, they were not subject to N.C. income or gift tax for that period, except for income earned in North Carolina.

Taxation

Constitutional – Just & Equitable Tax Clause – Municipal – Licenses & Permits – 59,900 Percent Increase – Internet Sweepstakes Cafes – First Impression

IMT, Inc. v. City of Lumberton (Lawyers Weekly No. 13-06-0218, 12 pp.) (Mark Martin, J.) Appealed from Robeson County Superior Court (Robert Frank Floyd Jr., J.) On appeal from the Court of Appeals. N.C. S. Ct.

Holding: A tax increase of at least 59,900 percent on one type of business – internet sweepstakes cafes – violates the Just and Equitable Tax Clause of N.C. Const. art. V, § 2(1).

We reverse summary judgment for the city and remand for further proceedings.

Taxation

First Impression – Federal Bonus Deduction – State ‘Add Back’ – Corporate – Conversion – C to S

Bodford v. North Carolina Department of Revenue (Lawyers Weekly No. 13-15-0360, 16 pp.) (John R. Jolly Jr., Ch.J.) 2013 NCBC 19

Holding: Once their C corporations converted to S corporations, the petitioner-shareholders could not take “add-back” deductions on their personal state income taxes that were based on accelerated federal deductions the C corporations had taken on their corporate income taxes before the conversion. Petitioners made no additions under G.S. § 105-134.6(c)(8) to their taxable income in previous years for the add-back deductions claimed.

The court upholds respondent’s disallowance of petitioners’ deductions.

Taxation

State Income – U.S. Treasury Bonds – Market Discount Income – First Impression – Interest

Fidelity Bank v. North Carolina Department of Revenue (Lawyers Weekly No. 13-15-0482, 19 pp.) (John R. Jolly Jr., J.) 2013 NCBC 27

Holding: Even though the N.C. Revenue Act uses the Internal Revenue Code to determine state net income, and even though the Code treats “market discount income” on U.S. Treasury bonds as interest for purposes of the Code, under the N.C. Revenue Act market discount income on U.S. Treasury bonds is treated as income rather than interest.

We affirm respondent’s ruling that petitioner was not entitled to deduct its market discount income from its state net income. On the issue of interest abatement on the assessment from 2002 to 2006, we remand for further proceedings.

Taxation

Electronic Gaming – Constitutional – Just & Equitable Clause – Municipal – 8,900 Percent Increase

Smith v. City of Fayetteville (Lawyers Weekly No. 13-07-0547, 10 pp.) (Robert N. Hunter Jr., J.) Appealed from Cumberland County Superior Court (Russell J. Lanier Jr., J.) On remand from the N.C. Supreme Court. N.C. App.

Holding: The defendant-city’s 8,900 percent minimum tax increase on electronic gaming operations is wholly detached from the moorings of anything reasonably resembling a just and equitable tax. IMT, Inc. v. City of Lumberton, 738 S.E.2d 156 (2013).

We reverse summary judgment for the city and remand for further proceedings.

Taxation

Civil Practice – Sovereign Immunity – Administrative Remedies – ‘Facilitators’

Orbitz, LLC v. Hoyle (Lawyers Weekly No. 13-15-0535, 24 pp.) (Calvin E. Murphy, J.) 2013 NCBC 29

Holding: Since plaintiffs do not pay the N.C. sales tax directly, G.S. § 105-241.17 does not provide them with an avenue to challenge the tax; therefore, plaintiffs can challenge the tax’s constitutionality directly.

Defendants’ motions to dismiss are granted in part and denied in part.

Plaintiffs are online travel companies. They challenge the amendments to N.C. sales tax (the Amendments), which define plaintiffs as “facilitators” and require them to collect sales tax on their facilitation fees, report the tax to the hotel in question, and send the tax due to the hotel. Plaintiffs also challenge Durham County’s Room Occupancy Tax, which is imposed on room rentals subject to the Sales Tax.

Tort/Negligence

Civil Practice – Pleadings – Defendant’s Capacity – Sovereign Immunity – Defamation – Public Employees

White v. Trew (Lawyers Weekly No. 13-06-0087, 11 pp.) (Barbara Jackson, J.) (Robert H. Edmunds Jr., J., dissenting) (Cheri Beasley, J., not participating) Appealed from Wake County Superior Court (W. Osmond Smith III, J.) On discretionary review from the Court of Appeals. N.C. S. Ct

Holding: Since the complaint does not specify whether defendant is being sued in his individual or official capacity, we will presume that he is being sued in his official capacity; therefore, sovereign immunity bars plaintiff’s libel claim.

We reverse the Court of Appeals’ decision, which upheld the trial court’s denial of defendant’s motion to dismiss.

Tort/Negligence

Negligent Infliction of Emotional Distress – Civil Practice – Subject Matter Jurisdiction – Workers’ Compensation – Exclusivity Provision

Shaw v. Goodyear Tire & Rubber Co. (Lawyers Weekly No. 13-07-0042, 25 pp.) (Donna S. Stroud, J.) Appealed from Cumberland County Superior Court (Mary Ann Tally, J.) N.C. App.

Holding: The Industrial Commission had exclusive jurisdiction over an employee’s negligent infliction of emotional distress claim, which was based on the employee’s allegations that her former employer negligently handled her complaints of harassment by a supervisor.

We vacate the jury’s $450,000 verdict for plaintiff.

Tort/Negligence

Wrongful Death – Workers’ Compensation – Exclusivity Provision – Temp Agency – Special Employment – Contract Provisions

Gregory v. Pearson (Lawyers Weekly No. 13-07-0014, 14 pp.) (Robert N. Hunter Jr., J.) Appealed from Cleveland County Superior Court (Richard Doughton, J.) N.C. App.

Holding: When it agreed to staff its landfill with temporary agency workers, the defendant-county allocated the risk of workers’ compensation liability to the temp agency. Having contracted away the responsibilities of the Workers’ Compensation Act, the county may not now seek the protection of the Act against the risk of a large damage verdict for civil tort liability.

We reverse the trial court’s order dismissing the plaintiff-administratrix’s wrongful death claim against the county.

Tort/Negligence

Wrongful Death – Workers’ Compensation – Exclusivity Provision – Contract – Management Company Employee

Taft v. Brinley’s Grading Services, Inc. (Lawyers Weekly No. 13-07-0121, 34 pp.) (Martha A. Geer, J.) Appealed from Pitt County Superior Court (W. Russell Duke Jr., J.) N.C. App.

Holding: The “Employee Leasing Agreement” between the defendant-grading company and a management company said plaintiff’s decedent was an employee of only the management company and that he was subject to the direction and control of the management company. The agreement creates uncertainty as to whether the decedent was also a “special employee” of the grading company such that the Workers’ Compensation Act’s exclusivity provision would bar plaintiff’s wrongful death claim against the grading company.

We reverse summary judgment for the grading company on plaintiff’s vicarious liability claim. We affirm summary judgment for defendant Thomas Brinley and for the grading company on plaintiff’s direct negligence claim.

Tort/Negligence

Products Liability – Civil Practice – Costs – Expert Witness Fees – Guardian ad litem – Directed Verdict

Stark v. Ford Motor Co. (Lawyers Weekly No. 13-07-0258, 13 pp.) (Robert C. Hunter, J.) Appealed from Mecklenburg County Superior Court (Forrest D. Bridges, J.) On remand from the N.C. Supreme Court. N.C. App.

Holding: Where there was no finding that the minor plaintiffs’ guardian ad litem acted in bad faith, the trial court abused its discretion when it taxed costs against the guardian ad litem. While G.S. § 6-30 permits the taxing of costs against a guardian, N.C. R. Civ. P. 17(b)(1) distinguishes a “guardian” and a guardian ad litem. Case law and G.S. § 6-31 allow the taxing of costs against a guardian ad litem only in cases of mismanagement or bad faith.

We reverse the taxing of costs against plaintiffs.

Tort/Negligence

Defamation – Libel – Blog Posts – Texas Law – Civil Practice – Choice of Law – Intellectual Property – Copyright Infringement Claim

Ascent Health Corp. v. Wells (Lawyers Weekly No. 13-02-0250, 27 pp.) (W. Earl Britt, Sr.J.) 4:12-cv-00083; E.D.N.C.

Holding: In a choice of law analysis, the general rule for defamation claims is that the place of harm is the place of publication; however, when a publication occurs over the internet, publication takes place in more than one state. The court predicts that the N.C. Supreme Court would apply Texas law in this case because the alleged injury to plaintiffs – in the form of reputational and financial harm – is centered in Texas, the state where the plaintiff-hospital and its plaintiff-medical director are located.

Defendant Wells’ motion to dismiss is granted as to plaintiffs’ claims which arise exclusively under N.C. law (libel under N.C. law and violation of the N.C. Unfair and Deceptive Trade Practices Act), civil conspiracy, and copyright infringement. Plaintiffs’ claims for libel and business disparagement under Texas law remain.

Tort/Negligence

Medical Malpractice – Standard of Care – Top Teaching Hospitals Nationwide – Battery – Wrong Rib Removed

Higginbotham v. D’Amico (Lawyers Weekly No. 13-07-0362, 13 pp.) (Linda Stephens, J.) Appealed from Durham County Superior Court (Carl R. Fox & G. Wayne Abernathy, JJ.) N.C. App.

Holding: Plaintiff’s expert testified that the defendant-hospital should be held to the standard of care of the nation’s top teaching hospitals in urban settings and other major university hospitals. This met the requirement of G.S. § 90-21.12.

We reverse the trial court’s grant of a directed verdict for defendants on plaintiff’s medical malpractice claim. We affirm the trial court’s grant of summary judgment for defendants on plaintiff’s battery claim.

Tort/Negligence

Medical Malpractice – Standard of Care – Physician’s Assistant – Supervising Doctor – Wrongful Death – Remarriage – Collateral Source Rule – First Impression

Katy v. Capriola (Lawyers Weekly No. 13-07-0366, 23 pp.) (Ann Marie Calabria, J.) Appealed from McDowell County Superior Court (Joseph Crosswhite, J.) N.C. App.

Holding: The defendant-doctor’s testimony, which was sufficient to allow him to testify about the standard of care applicable to him, was also sufficient to allow him to testify as to the standard of care applicable to the defendant-physician’s assistant.

Defendants are entitled to a new trial.

Tort/Negligence

Civil Practice – Agency – Duty – Corporate Negligence – Summary Judgment – Medical Malpractice

Estate of Ray v. Forgy (Lawyers Weekly No. 13-07-0433, 13 pp. (John C. Martin, Ch.J.). Appealed from Burke County Superior Court (Robert C. Ervin, J.) N.C. App.

Holding: Although under the doctrine of respondeat superior a hospital is liable for the negligence of a physician or surgeon acting as its agent, where a patient has signed separate treatment and release forms with a physician, it suggests the plaintiff looked to the doctor separately and distinctly from the hospital to receive treatment. However, the defendant-hospital did breach a duty to the plaintiff when it re-credentialed the doctor as a member of the medical staff after failing to investigate his history of medical negligence claims.

Accordingly, we hold the court erred in granting defendants’ motion for summary judgment.

Tort/Negligence

Medical Malpractice – Proximate Cause – Expert Testimony – Nerve Damage – Positioning During Surgery

Williams v. Humphreys (Lawyers Weekly No. 13-16-0526, 15 pp.) (Martha A. Geer, J.) Appealed from Buncombe County Superior Court (Sharon Tracey Barrett, J.) N.C. App. Unpub.

Holding: Where plaintiff’s experts identified the precise negligence that resulted in her injury – malpositioning during surgery – the experts did not simply presume negligence from the fact of injury.

We reverse summary judgment for defendants.

Tort/Negligence

Malicious Prosecution – Initiation – Restatement Standard – Giving Information to Police

North Carolina Farm Bureau Mutual Insurance Co. v. Cully’s Motorcross Park, Inc. (Lawyers Weekly No. 13-06-0593, 20 pp.) (Robert H. Edmunds Jr., J.) (Cheri Beasley, J., joined by Robin E. Hudson, J., concurring in part and dissenting in part) Appealed from Wilson County Superior Court (Wayland J. Sermons Jr., J.) On discretionary review from the Court of Appeals. N.C. S. Ct.

Holding: Even though defendant Volpe would probably never have been charged with obtaining property by false pretenses if the plaintiff-insurance company’s investigator had not told a police sergeant the results of his investigation, we reject this “but for” standard as the method for proving the initiation element of malicious prosecution. Instead, we adopt the standard set out in Comment (g) of § 653 of the Restatement (Second) of Torts.

We reverse the Court of Appeals’ decision, which upheld the trial court’s judgment for defendant Volpe on her malicious prosecution and unfair trade practices counterclaims.

Tort/Negligence

Personal Injury – Shooting – 52-Year-Old Shooter – Parents’ Gun

Bridges v. Parrish (Lawyers Weekly No. 13-06-0594, 8 pp.) (Mark Martin, J.) (Cheri Beasley, J., not participating) Appealed from Johnston County Superior Court (Thomas D. Haigwood, J.) Appealed from the Court of Appeals. N.C. S. Ct.

Holding: We reject plaintiff’s claim that defendants are liable for failing to secure their gun, thereby allowing their 52-year-old son to gain access to the gun and shoot plaintiff with it.

We affirm our Court of Appeals’ decision, which affirm the trial court’s grant of defendants’ motion to dismiss.

Workers’
Compensation

Form 60 – Mistake

Spivey v. Wright’s Roofing (Lawyers Weekly No. 13-07-0043, 25 pp.) (Sam Ervin IV, J.) Appealed from the Industrial Commission. N.C. App.

Holding: Once the defendant-appellants filed an I.C. Form 60, they could not withdraw the Form 60 on the basis of “mistake”, either unilateral or mutual.

We affirm the Industrial Commission’s award of benefits from appellants to plaintiff.

Workers’
Compensation

Settlement Agreement – Release of Other Claims – Enforceable – Denied Claim – Fair & Just

Blake v. Cree, Inc. (Lawyers Weekly No. 13-08-0107, 20 pp.) (Bernadine S. Ballance, Commissioner) I.C. Nos. 773176 & 781740

Holding: Even though plaintiff now contends she would not have signed the agreement settling her workers’ compensation claim if she had known she was also signing a separate release of her other employment-related claims, the clincher agreement itself is enforceable.

The clincher agreement is approved.

Workers’
Compensation

Notice – Delay in Filing – Reasonable Excuse – No Prejudice – Treating Physician

Yingling v. Bank of America (Lawyers Weekly No. 13-07-0215, 34 pp.) (Donna S. Stroud, J.) Appealed from the Industrial Commission. N.C. App.

Holding: After delivering refreshments to a meeting, plaintiff was moving his car back to his regular parking space when he was involved in a collision. Where plaintiff’s branch manager and supervisor went to the scene of the accident, and where plaintiff contacted his manager and informed her of the accident that same day, the defendant-employer had actual notice of the accident.

We affirm the Industrial Commission’s award of benefits.