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Building a bigger Business Court

State Business Court expansion appears to be gaining traction

During the prior regular session of the N.C. General Assembly, amid discussions that resulted in cuts to the court’s administrative system and a failed push to ax a dozen special Superior Court judgeships, a handful of legislators bandied about the idea of expanding the state’s Business Court.lightbulb money

Those informal talks have continued, appear to be gaining traction and could eventually spur the creation of at least two new locations for the specialized court in the eastern and western parts of the state, according to several sources.

If that happens, the state will be able to boast five Business Court locations as part of its pitch to encourage companies to set up shop here. North Carolina’s first Business Court opened in 1996 in Greensboro. Nine years later, the legislature established two additional locations in Charlotte and Raleigh.

Several other states have modeled their business courts on the North Carolina design, which is flattering but has also led to increased competition. N.C. Business Court Chief Judge John R. Jolly Jr. said some of these outside
jurisdictions have poured more resources into their courts.

“Some have 15 or 20 judges. We can’t compete with that,” he said. “But if we can get a couple [of new locations] it will help us speed up our turnaround time and it would give us latitude if the legislature or chief justice wanted to expand the types of cases we handle.”

Jolly, who is slated to retire in October, wants to see the Business Court take on a broader array of complex disputes involving corporate and commercial law. N.C. Supreme Court Chief Justice Sarah Parker assigns cases to the court based on criteria outlined under state statute, and the same judge sticks with the matter throughout its lifespan – the main benefit of the court.

A suit may pit two major companies against one another and have billions of dollars at stake, but if the matter does not fall within the issues listed within the statute – it could be a basic breach of contract dispute, for instance – then technically it is not a Business Court case.

The only way the court could accept more types of cases is if it grows, Jolly said. At this point, it looks like Asheville and Wilmington are the likely locations for the two new branches of the Business Court. However, other areas, including New Bern and Raleigh, are also in the conversation.

Opening a new court would cost about $574,000, which covers staff costs and all other expenses except those associated with the courthouse itself, such as rent payments, according to the N.C. Administrative Office of the Courts. Jolly said he’d heard estimates, which include courtroom costs, that range from $600,000 to $1 million.

“From our perspective we could put it together pretty quickly. But getting it funded is above my pay grade,” he said. “I do get the sense that there’s support for it in the legislature. But when you start looking at who’s going to write the check, I don’t know the answer for that.”

Gov. Pat McCrory’s chief legal counsel, Bob Stephens, said the governor has been pushing for legislation to expand the Business Court and has had discussions with a handful of legislators, including state senators E.S. “Buck” Newton and Thom Goolsby, both Republicans and members of the Senate judiciary committee.

“We believe that having full resources in the Business Court will help economic development,” Stephens said. “I think that’s been proven in other states. When they have a strong business court system, companies are more inclined to come into the state and create jobs. Jobs are a huge issue with [McCrory].”

State Rep. N. Leo Daughtry, a Republican who chairs the House judiciary committee, said he had the sense that both the House and Senate were interested in expanding the Business Court, perhaps as soon as the upcoming short session in May.

“So much litigation is now done through mediation and arbitration at the Superior Court level, but not with the highly complex cases that go to the Business Court,” said Daughtry, a Smithfield lawyer. “The Business Courts we have are awfully busy. I think it would be a good economic move to increase the number of courts we have and take care of the backlog.”

The Business Court had 247 pending cases in 2012, according to the most recent statistics. That same year it closed 128 disputes and took on 119 new suits. During the prior year, the court had 252 pending case and closed 121.

While some lawyers who practice regularly in the Business Court grumble about lengthy wait times for orders, Jolly said the turnaround has improved markedly since each of the court’s judges were allotted two law clerks, instead of one, about three years ago.

Jolly said he can now usually issue an opinion in about a month or two if the case is not overly complicated and he brings most disputes to trial within about six months, though more difficult cases can drag on for years.

“Up until about three years ago, we were woefully behind,” Jolly added. “But having the extra clerks has been a blessing. We’ve made huge inroads.”

Judges for the new Business Court locations could be pulled from the pool of special judges who have been appointed to the bench, rather than elected, in the trial division of the state’s Superior Courts. A group of state senators tried, and failed, during the last long session to eliminate 12 special judgeships in the trial courts.

“I think the effort will be made again,” said Watauga County Senior Resident Superior Court Judge C. Philip Ginn, who was elected. “But I would hope that the effort falls on less fertile ground than it did in this past session.”

Ginn supports Business Court expansion, even if it means shifting resources from the trial level of the Superior Court. Also, AOC officials reported that their office had not received any complaints from trial judges and others about the fairness of giving more resources to the Business Court.

“They’re working pretty hard at the Business Court from what I can tell. It seems to me that the need is there,” Ginn said. “It just makes sense to redirect your resources to where they are needed.”

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