North Carolina Appellate Blog

Non-Compete Agreements Cannot be "Reasonable-ized" by Court--Even with the Parties' Consent

2016-03-19T14:47:00.002-05:00

Yesterday, the Supreme Court stiffened its stern treatment of non-compete agreements. At issue in Beverage Systems was a non-compete clause that allowed the trial court to modify its geographic scope if the court determined the original scope was unreasonable. The trial court, however, declined to shrink the agreement’s scope--even after finding it unreasonable. The Court of Appeals reversed, noting that the parties had expressly empowered the trial court to modify the agreement. Tailoring was appropriate, the COA held, because it “makes good business sense and better protects both a seller’s and purchaser’s interests in the sale of a business . . . . in a rapidly changing economy.”

But The Supreme Court rejected the COA’s premise. Because “parties cannot contract to give a court power it does not have,” the parties could not authorize the trial court to modify the agreement. “Allowing litigants to assign to the court their drafting duties as parties to a contract would put the court in the role of scrivener," the Court held. "We see nothing but mischief in allowing such a procedure.”

So it seems that court-may-modify clauses in non-compete agreements are now unenforceable in North Carolina.

COA Confirms That Any Appeals in Suits Designated Complex Business Cases After October 1, 2014 Must Go to the NC Supreme Court, or Face Dismissal

2016-03-15T20:19:00.000-05:00

Today the Court of Appeals issued a decision addressing Session Law 2014-102, the 2014 Business Court Modernization Act, which requires that appeals in matters that are designated as mandatory complex business cases go straight to the NC Supreme Court. The case is Christenbury Eye Center v. Medflow, Inc. and Riggi.

This case involved a dispute between Christenbury, which offered opthalmalogic and eye services, and Medflow, which provided medical records management software and was founded by Riggi. Christenbury filed a Complaint on September 22, 2014 against Medflow and Riggi, alleging that they breached an agreement to further develop and resell the software platform to other ophthalmological practices by failing to pay royalties owed to Christenbury. The case was designated as a mandatory complex business case on October 29, 2014.

Judge Gale granted Medflow and Riggi's motions to dismiss Christenbury's claims for breach of contract and unfair and deceptive trade practices. Christenbury appealed to the Court of Appeals.

The COA found that it lacked jurisdiction to consider the appeal, explaining that "[i]n 2014, our General Assembly enacted Chapter 102 of the 2014 North Carolina Session Laws, which, among other things, amended N.C. Gen. Stat. § 7A-27 so as to provide a direct right of appeal to the Supreme Court from a final judgment of the Business Court.[.]" The Court further concluded that the effective date of the 2014 amendments to N.C. Gen. Stat. § 7A-27(a)(2) was October 1, 2014, and any case designated as a mandatory complex business case after that date (whether it was filed before that time or not) was subject to the 2014 amendments to N.C. Gen. Stat. § 7A-27(a)(2).

There are certainly myriad cases currently pending in Business Court that will lead to appeals. Just remember that if your case was designated after the magic date, you'll face dismissal (and likely lose your right to appeal due to untimeliness) if you don't go straight to the Supreme Court.

And....we're back!

2016-03-15T10:30:00.000-05:00

After a bit of a hiatus, the NC Appellate Blog is back to bring you (hopefully) quick and useful summaries of state appellate court decisions that relate to civil and business litigation...and anything else we think is particularly interesting for litigators in North Carolina, including judicial elections and appointments. We hope you'll follow us and send us any comments or questions you may have!

NC COA: Tillman Substantive Unconscionability Test No Longer Valid

2014-02-07T10:05:00.004-05:00

The North Carolina Court of Appeals' unanimous decision in Torrence v. Nationwide Budget Finances dramatically reshapes the law governing the unconscionability of arbitration clauses. The Court of Appeals held that the United States Supreme Court’s recent rulings regarding arbitration clauses in AT&T Mobility LLC v. Concepcion and American Express Co. v. Italian Colors Restaurant have undermined North Carolina Supreme Court’s reasoning in Tillman v. Commercial Credit Corp., the leading North Carolina case on the unconscionability of arbitration clauses. If Torrence stands, it will eliminate the current test for determining whether an arbitration clause is substantively unconscionable and, by extension, the entire test announced in Tillman regarding the unconscsionability of arbitration clauses.

This case arises out of the relationship between two borrowers, James Torrence and Tonya Burke, and County Bank of Rehoboth Beach, an FDIC insured Delaware bank that offered short-term consumer loans in North Carolina. In 2003 and 2004, the borrowers obtained eighteen loans or loan renewals from County Bank. The borrowers signed an identical note and disclosure agreement in connection with each loan or renewal which contained an agreement to arbitrate all disputes that arose from the loans and a waiver of the borrower’s right to participate in a class action related to the loans. The National Arbitration Forum ceased conducting arbitrations shortly after the borrowers signed the loan agreements.

The borrowers subsequently brought claims against the defendants alleging violations of North Carolina’s Consumer Finance Act, the North Carolina unfair trade practice laws, and North Carolina usury laws. The plaintiffs sought to have the matter certified as a class action. The defendants responded by filing an answer, a motion to dismiss due to lack of personal jurisdiction, and a motion to compel arbitration.

The trial court denied the motion to compel arbitration, denied the motion to dismiss, and granted a motion certifying the action as a class action. The trial court denied the motion to compel arbitration based, in part, on the grounds that the arbitration agreements were procedurally and substantively unconscionable. The defendants immediately appealed the trial court’s order.

After reviewing the applicable cases, the Court of Appeals found itself “in the difficult position that the holdings of the North Carolina Supreme Court in Tillman conflict with those of the United States Supreme Court in Concepcion and Italian Colors.”
The United States Supreme Court’s opinions, which were both issued after Tillman, rejected the various factors the North Carolina Supreme Court utilized in Tillman to determine that an arbitration clause was substantively unconscionable. These factors were (1) prohibitively high arbitration costs; (2) an arbitration clause that is excessively one sided and lacking mutuality; and (3) a provision in the arbitration agreement which prohibited joinder of claims and class actions.

The Court of Appeals determined that the trial court should not have focused on the potential for prohibitively high arbitration costs because, in Italian Colors, the United States Supreme Court rejected the Second Circuit’s approach which focused on the cost of developing evidence which the parties could use to support their claims. The reasoning of Italian Colors was construed by the Court of Appeals “as eliminating the type of cost analysis applied by the North Carolina Supreme Court in Tillman.”
The one sided nature of an arbitration agreement was no longer a valid ground for finding the arbitration clause to be unconscionable because the United States Supreme Court “in Concepcion was dismissive of the idea that an arbitration agreement, apart from any other form of contract, could be found unconscionable based upon its adhesive nature.” Given that most consumer contracts are now contracts of adhesion, “the one-sided quality of an arbitration agreement is not sufficient to find it substantively unconscionable.”

Finally, the United States Supreme Court’s opinions in both Concepcion and Italian Colors precluded using the presence of a class action waiver in an arbitration agreement as a ground for finding the agreement to be substantively unconscionable. Such an arrangement is not unconscionable because parties are able to “‘effectively vindicate’ their rights in the context of a bilateral arbitration.”

After applying Concepcion and Italian Colors, there were no remaining grounds to find the arbitration agreement at issue to be substantively unconscionable. Because under Tillman a contract must be both procedurally and substantively unconscionable to be declared unenforceable, the lack of substantive unconscionability required the reversal of the trial court’s order.

As the Court of Appeals’ analysis focused on the Tillman factors generally and not the specifics facts of this case, this case could spell the end of the Tillman test and broaden the ability of corporations to utilize arbitration clauses in consumer contracts. However, given that the opinion finds that a North Carolina Supreme Court opinion is no longer applicable and will have a large impact on consumer transactions across the state, it is likely that the North Carolina Supreme Court will weigh in on Tillman’s continuing viability before this case is over.

COA: Admission by Defendants That They Received Summons and Complaint is Sufficient for Proper Service

2013-11-08T19:14:00.000-05:00

On Tuesday the Court of Appeals held that an individual defendant can be properly served even if they don't accept service of the summons and complaint; the defendant just needs to personally receive it from the party who was actually served. The case is Washington v. Cline et al.

Plaintiff Frankie Washington was imprisoned for six years on charges of assault with a dangerous weapon, attempted robbery with a dangerous weapon, assault and battery, and attempted first-degree sex offense, and these charges were vacated by the COA due to violations of Washington’s right to a speedy trial. Frankie Washington and his son Frankie Jr. brought multiple claims against various officials of Durham, the City of Durham, and the State of North Carolina related to Frankie Sr.'s imprisonment, including constitutional violations, malicious prosecution, negligence, negligent and intentional infliction of emotional distress, conspiracy, and supervisory liability.

The trial court dismissed Plaintiffs' claims for insufficient service of process. Defendants were served via FedEx, a designated delivery service. However, one defendant was served by delivery of the package to his minor grandson who was playing in the front yard; another received the FedEx package after it had been left at her front doorstep; and several others were served by leaving the package with an employee for the City’s Police Department who was responsible for “receiving materials and supplies delivered to the Police
Department for use in its operations.” All these defendants admitted in affidavits that they personally received the summons and complaint.

Plaintiffs appealed the trial court's dismissal of their Complaint. Defendants argued that a designated delivery service must personally serve natural persons or service agents with specific authority to accept service with the summons and complaint in order to sufficiently “deliver to the addressee" under Rule 4(j)(1)(d) and N.C. Gen. Stat. § 1-75.10(a)(5). The COA found that the plain language of N.C. Gen. Stat. § 1-75.10 allows a plaintiff to prove service by designated delivery service with evidence that copies of the summons and complaint were “in fact received” by the addressee, and it's not necessary to show that the delivery service agent personally served the individual addressee. Thus, the Court noted, "the crucial inquiry is whether addressees received the summons and complaint, not who physically handed the summons and complaint to the addressee." The COA further noted that the fact that the legislature failed to include a personal delivery requirement in Rule 4(j)(1)(d) when it did so in other subsections throughout the statute indicated its intention to exclude it, and Plaintiffs provided sufficient evidence in the form of delivery receipts and affidavits pursuant to Section 1-75.10 to prove that all defendants-appellees except the City were properly served under Rule 4(j)(1)(d). The COA unanimously found that Plaintiffs properly served all defendants except the City of Durham, and reversed the trial court’s dismissal of the claims against them. The summons and complaint issued to the City were not addressed to either the mayor, city manager, or clerk as required by Rule 4(j)(5)(a), and were instead addressed to the City Attorney, which was insufficient to confer jurisdiction over the City. The only evidence plaintiffs provided that the City was properly served was a newspaper article wherein the mayor mentioned the lawsuit (which could indicate that he in fact received the summons and complaint). Even though the mayor had actual notice of the lawsuit, this wasn't enough to give the Court jurisdiction over the City.

COA: Parties Facing Dismissal of Note Enforcement Action Should Clearly Plead the Chain of Title, and Request that Any Dismissal of The Complaint be Without Prejudice.

2013-11-06T13:50:00.000-05:00

Tuesday the Court of Appeals made clear that, in order to avoid dismissal, parties seeking to enforce a note need to make a clear showing that they're the holder. The Court also reminded litigants that they should take measures in advance to avoid a dismissal with prejudice. The case is First Federal Bank v. Aldridge.

Plaintiff First Federal Bank ("FFB") sought enforcement of two promissory notes executed by defendant Aldridge. Both of the notes identified Aldridge as the borrower and “Cape Fear Bank” as the lender. FFB was not referenced in either note. FFB attached an affidavit to its complaint that included a statement from an employee familiar with the books and records related to the notes, and that the notes were in default. The trial court dismissed the Complaint with prejudice on the grounds that FFB had failed to sufficiently plead that it was the holder.

The Court found that "evidence that a plaintiff is the holder of a promissory note, or has otherwise acquired the rights of the holder, is an essential element of a cause of action upon such note." Because neither the text of the complaint nor the affidavit indicated that FFB had acquired the debt from Cape Fear Bank or was otherwise entitled to enforce them as a holder in due course, the COA found that FFB had not demonstrated its right to enforce promissory notes which were executed by Aldridge with a third party bank, and affirmed the trial court's dismissal of the Complaint. The COA also noted that if FFB had been a payee or endorsee of the notes that were attached to the Complaint, it would have been the prima facie owner and holder. Here, FFB did not plead that the notes had been assigned or transferred to it from the third party bank.

FFB also argued that dismissing its Complaint with prejudice was inequitable, and that it should have had an opportunity to amend the Complaint. Noting that the decision to dismiss an action with or without prejudice is subject to an abuse of discretion standard, and that the party whose claim is being dismissed has the burden to show it deserves a "second chance," the COA found that the dismissal was proper because the record contained no evidence that Plaintiff sought to amend the complaint during the hearing or afterward, nor did it move for a dismissal without prejudice.

Court of Appeals Holds Michael Peterson Entitled to New Trial

2013-07-16T11:48:00.000-05:00

Today, in the case of State v. Peterson, a panel of the North Carolina Court of Appeals (Hunter, Robert C.; Stroud; Ervin) unanimously affirmed the trial court's order granting Michael Peterson's motion for appropriate relief and granting him a new trial. James P. Cooney, III of Womble Carlyle served as Peterson's appellate counsel.

Following a highly publicized trial, Peterson was convicted in 2003 of the first degree murder of his wife, Kathleen Peterson, and was sentenced to life in prison. The State's theory at trial was that Peterson intentionally killed his wife by striking her repeatedly with a fireplace blowpoke, causing her to fall down a staircase. Peterson, on the other hand, contended that his wife died as a result of an accidental fall.

In February 2011, Peterson filed a motion for appropriate relief ("MAR") based on alleged newly discovered evidence concerning misrepresentations made at trial by one of the State's key witnesses, State Bureau of Investigation Agent Duane Deaver, who had testified as an expert in bloodstain pattern analysis. The newly discovered evidence concerned, among other things, Agent Deaver's representations regarding the number of cases involving bloodstain analysis in which he had participated, the number of reports he had written in cases involving bloodstain analysis, the number of times he had qualified as an expert witness in bloodstain analysis, and the number of times he had been to a potential crime scene involving an alleged accidental fall. At the conclusion of the hearing on the MAR in December 2011, the trial court granted the MAR, vacated Peterson's conviction, and granted him a new trial. The State appealed to the Court of Appeals.

On appeal, the State contended in part that Peterson was not entitled to a new trial because he failed to establish all of the prerequisites needed to prevail on a MAR based on newly discovered evidence. There are seven elements which a defendant must establish in order to prevail on a MAR:

that the witness or witnesses will give newly discovered evidence,
that such newly discovered evidence is probably true,
that it is competent, material and relevant,
that due diligence was used and proper means were employed to procure the testimony at the trial,
that the newly discovered evidence is not merely cumulative,
that it does not tend only to contradict a former witness or to impeach or discredit him, and
that it is of such a nature as to show that on another trial a different result will probably be reached and that the right will prevail.

The Court of Appeals held that the evidence of Agent Deaver's misrepresentations concerning his qualifications satisfied the seven criteria. As to the first and second elements, numerous witnesses testified at the MAR hearing regarding Agent Deaver's misrepresentations about his qualifications and the manner in which this evidence was discovered after Peterson's conviction, and the State did not contest this evidence. Third, the evidence was relevant and material in that it was logically related to issues at Peterson's trial—specifically, Agent Deaver's testimony and, relatedly, his credibility; further, this evidence had a direct bearing on the issues at trial. Fourth, Peterson attempted to procure this testimony at trial through extensive voir dire questioning. Fifth, the evidence was not cumulative because Peterson was unable to demonstrate this evidence at trial.

Sixth, the evidence constituted much more than impeachment evidence. The Court held that due to the importance of Agent Deaver's testimony, the evidence concerning his qualifications would have completely undermined the credibility of the State’s entire theory of the case, as he was the only witness to describe to the jury how he believed Peterson killed his wife, and was the only witness to testify that the bloodstains indicated that Peterson had tried to not only clean up the scene but was also close to his wife at the time she sustained her injuries. Finally, as to the seventh element, the Court held that had Agent Deaver's testimony been undermined, the jury would probably not have unanimously agreed on a guilty verdict based on this evidence. Therefore, the Court held that the trial court had not erred in vacating Peterson's conviction and ordering a new trial.

The Court of Appeals also rejected the State's argument that if the Court did not reverse the MAR order, it should, in the alternative, remand the case for a new hearing. The State argued that the trial court erred in precluding the State from asking specific questions of Peterson's experts and in granting Peterson's motion in limine regarding certain experts the State intended to call. However, the Court of Appeals held that the State was trying to collaterally establish that the jury would have reached the same verdict based on evidence not introduced at trial, and the trial court had properly excluded this evidence because it was beyond the scope of the MAR hearing.

Accordingly, the Court affirmed the decision of the trial court.

Court of Appeals Opinions

2013-07-16T10:37:00.002-05:00

The North Carolina Court of Appeals released opinions this morning. They are available for viewing here.

North Carolina Supreme Court Clarifies Rule Regarding "Initiation of Proceedings" in Context of Malicious Prosecution Claim

2013-06-19T08:33:00.000-05:00

In N.C. Farm Bureau Mutual Insurance Co. v. Cully’s Motorcross Park, Inc., the North Carolina Supreme Court recently clarified an important rule regarding when a third party who provides investigative information to law enforcement may be held liable for malicious prosecution. In this case, an investigator for the plaintiff, Farm Bureau, who was investigating a house fire found evidence of arson and reported his suspicions to a Wilson Police Department sergeant. The investigator’s findings included allegations that the defendant, the president and sole stockholder of the company that owned the property at the time of the fire, had failed to report to Farm Bureau that there was a deed of trust on the property when she insured it, when she filed a claim of loss after the fire, or when she later sold the burned property to a purchaser who did not know it was still encumbered. The defendant was later arrested and charged with obtaining property by false pretenses based on her sale of the encumbered property, although that charge was later dismissed. When Farm Bureau brought a declaratory judgment action seeking a ruling it was not obligated under the property’s insurance policy, the defendant brought a counterclaim for malicious prosecution against Farm Bureau.

To prove a claim for malicious prosecution, the defendant had to show that (1) Farm Bureau initiated the criminal proceeding against her, (2) malice on the part of Farm Bureau in doing so, (3) lack of probable cause for the initiation of the criminal proceeding, and (4) termination of the earlier proceeding in favor of the defendant. The issue on appeal was whether the trial court properly found that Farm Bureau had initiated the prosecution of the defendant. The Court of Appeals held that Farm Bureau had initiated the criminal proceedings, reasoning that without the efforts of Farm Bureau’s investigator in investigating the claim and providing all of his information to the police, it was unlikely that the defendant would have been criminally prosecuted.

On appeal, the Supreme Court disagreed, citing Section 653 of the Restatement (Second) of Torts, which provides that giving a public official information of another’s supposed criminal conduct “or even making an accusation of criminal misconduct does not constitute a procurement of the proceedings initiated by the officer if it is left entirely to his discretion to initiate the proceedings or not.” The Court reasoned that this rule protects important public interests by allowing citizens to make reports in good faith to the police and prosecutors without fear of retaliation if the information proves to be incomplete or inaccurate. Moreover, the Court explained that this “sensible approach encourages independent investigation by those in law enforcement who receive the information.”

Applying this test to the facts, the Court held that Farm Bureau had not instituted the proceedings against the defendant, relying on testimony from Farm Bureau’s investigator that he never asked the police to arrest the defendant or initiate a prosecution against her and never made any suggestions as to what the police should do with the information he gave them, as well as testimony from the investigating officer that the decision to criminally charge the defendant was his entirely his decision. The Court's full opinion can be found here.

Court of Appeals Opinions

2013-05-21T14:28:00.002-05:00

The North Carolina Court of Appeals released opinions this morning. They are available for viewing here.

Womble Carlyle Attorneys Obtain Reversal of Judgment for Client

2013-05-09T19:23:00.003-05:00

Yesterday the Court of Appeals reversed a jury verdict as to two defendants in a breach of contract case and granted a new trial to the remaining defendant on the issue of damages. The case is Scheerer v. Fisher. Womble Carlyle attorneys Burley Mitchell and Bob Numbers represented Highland Forest Partners in this appeal.

David Scheerer and his company, Mountain Life Realty, sued defendants Jack Fisher, Renaissance Ventures, LLC, and Highland Forest Partners, LLC for breach of contract for the payment of a real estate brokerage commission. Scheerer, who had served as Fisher’s agent in previous real estate transactions, alerted Fisher to an 800 acre development in Western North Carolina that was for sale. Fisher's company, Renaissance Ventures, entered into agreements to purchase the property.

During the inspection period, Fisher discovered that the property wasn't large enough for all the residential lots he had anticipated developing. As a result Renaissance Ventures exercised its right to terminate the purchase agreement. Plaintiffs claimed that Fisher asked Scheerer to continue his due diligence on the property to determine if the property could be acquired at a lower price. Fisher later began negotiations to purchase the property through a different party who owned a minority interest in it. This new party entered into contracts to purchase the property for $14,750,000 and assigned the contract to Highland Partners, another company owned by Fisher.

Scheerer filed suit to obtain the commission he believed he was entitled to as a result of this sale. At trial, the jury found that there was a breach of contract by Fisher, Renaissance Ventures, and Highland Partners and awarded the plaintiffs $400,000.

After the trial, Highland Forest Partners retained Womble Carlyle to represent it in the appellate process. The Court of Appeals found that the trial court erred in denying Renaissance Ventures' and Highland Partners' motion for a judgment in their favor notwithstanding the verdict because there was insufficient evidence of a breach of contract by those defendants - Renaissance properly terminated the initial purchase agreement, and the only claim alleged against Highland Partners in Plaintiffs' complaint was for a breach of a contract implied in law, an issue which the jury did not reach. The opinion represents a complete victory for Renaissance Ventures and Highland Forest Partners.

The COA did find that there was sufficient evidence to uphold the jury verdict with respect to Fisher, even though he terminated the initial purchase agreement that provided Scheerer with a two percent commission, and the final purchase agreements did not contain such a provision. Fisher testified that Scheerer introduced him to the properties and that he encouraged Scheerer to seek a commission from the seller. The COA held that the testimony "provided more than a scintilla of evidence that plaintiffs and Fisher had an express agreement that Fisher would procure Scheerer’s commission for the purchase of the properties and that he failed to do so."

However, the COA determined that Fisher should be granted a new trial on the issue of damages because the jury's $400,000 award was not supported by the evidence. The trial court instructed the jury to compute damages by "multiplying the price for which the defendant purchased the property by the commission percentage, which you find that the parties agreed upon in the contract.” The jury multiplied the proposed purchase price of $20,000,000 in the initial purchase agreement, and not the actual purchase price of $14,750,000, by the agreed-upon two percent commission. The COA found that this figure was not supported by the evidence, vacated the damages award, and remanded for a new trial.

Interview with the Honorable Mark A. Davis, North Carolina Court of Appeals

2013-05-06T19:46:00.001-05:00

We recently sat down with the Honorable Mark A. Davis with the North Carolina Court of Appeals for a conversation about his path to the bench, life at the Court, and his thoughts on appellate practice. Read on for more details. . . .

Judge Davis received his undergraduate and law degrees from the University of North Carolina and then went on to serve as a law clerk for the Honorable Franklin T. Dupree at the United States District Court for the Eastern District of North Carolina. Upon completion of his clerkship, Judge Davis spent 13 years as a litigator at Womble Carlyle Sandridge & Rice before moving to the Attorney General’s office, where he spent five years in the Special Litigation section. While he was at the AG’s office, Judge Davis added to his significant civil experience by also working on criminal appeals. Prior to his appointment to the bench on December 31, 2012, Judge Davis spent two years serving as General Counsel for Governor Beverly Perdue.

Judge Davis told us that serving as a judge on the Court of Appeals is his “dream job,” as he has loved appellate law since his clerkship with Judge Dupree. Before coming to the bench, Judge Davis had quite a busy appellate practice, handling between 60-70 appeals at both the state and federal levels. During this time, he participated in approximately 20 oral arguments at the North Carolina Court of Appeals, five State Supreme Court arguments, and five Fourth Circuit arguments.

For Judge Davis, the most rewarding aspect of his job is the purity of the appellate process. Judge Davis loves that each time he is assigned a new case, he is handed a set of facts about which he knows almost nothing and within approximately 90 days his chambers has issued an opinion that represents the best efforts of the judges and staff on the Court, free of any bias or partisanship and uninfluenced by any outside interests.

By contrast, Judge Davis told us that the hardest part about being a judge on the Court of Appeals is handling the cases that come to the court under Rule 3.1 of the North Carolina Rules of Appellate Procedure. These are the cases that deal with the abuse, neglect, and dependency of children. Judge Davis explained that he takes his role in these cases very seriously and that these cases keep him up at night, knowing that he is one of three votes that often determine whether a parent gets to keep custody of his or her child.

We asked Judge Davis to impart some sage advice for appellate lawyers practicing in North Carolina, and he gave us a great list:

- Know your standard of review. Don’t just parrot the standard in your brief, but actually use it and write your brief with the standard in mind.

- Appreciate that the Court has limited time. Be concise. At oral argument, you should assume the judges are familiar with the facts and want to jump right into the legal arguments.

- Know the record. If you weren’t the lawyer that tried the case in the trial court, you still need to know your facts, and know where to find them in the record.

- Always accurately cite cases. If you misrepresent the holding or facts of a case cited in your brief, be aware that the Judge or his clerk will find it, and they will remember it.

- Don’t prepare for oral argument by memorizing a speech. Be prepared to jump right into an issue when asked by the Judges even if it’s not how you planned. Chief Justice John Roberts once explained that he used to write his arguments on different index cards and then each time he practiced his argument, he would flip through them in different order each time. That way, when the time for oral argument came, he was prepared no matter which direction the questioning took.

- Keep it professional, even when the other side doesn’t do a great job. The best lawyers are the ones who dismantle the other side’s arguments brick by brick but do so professionally and respectfully, without being shrill.

Finally, when we asked Judge Davis to identify some his “pet peeves” he hates to see on the bench, the number one thing he mentioned was something we can all avoid: typos! As Judge Davis eloquently put it, you can’t control the facts or the law but you can control proofreading and you can always have an error free brief. We’d say those are words to live by.

Rule Change Approved by the North Carolina Supreme Court

2013-03-28T14:33:00.002-05:00

Recently, the North Carolina Supreme Court issued an order adopting a handful of amendments to the North Carolina Rules of Appellate Procedure. Here is a brief summary:

Rule 28(h) has been amended to provide that appellants may now file a reply brief as of right regardless of whether a case is being heard for oral argument. The page limit for reply briefs prepared using non-proportional type is 15 pages and the word limit for reply briefs using proportional type is 3,750 words. This change also resulted in a number of semantic changes to a number of other rules.
Rule 27(b) has been amended to provide an additional three days to deadlines that are calculated from the date of service of some other document (other than the filing of a notice of appeal) when service occurs by electronic mail (if service by electronic mail is allowed by the Rules).
Rule 9(d) received a substantial rewrite. Here are the highlights:

Under the revised Rule 9(d) any exhibit filed, served, submitted for consideration, admitted, or made part of an offer of proof may be included in the record on appeal.
Documentary exhibits may be included in the record on appeal if they do not impact the legibility or original significance of the exhibit. If a documentary exhibit cannot be included in the record on appeal because inclusion would impact the legibility or original significance, three paginated copies must be filed with the appellate court. If multiple documentary exhibits are filed with the appellate court, the filing must include an index.
Any tangible items can be made part of the record on appeal by filing a written request with the clerk of superior court that she deliver the exhibit to the appellate court.

These new rules will be effective on April 15, 2013.

Court of Appeals Opinions

2013-03-19T11:21:00.001-05:00

The North Carolina Court of Appeals released opinions this morning. They are available for viewing here.

Crossman v. Life Care Centers of America, Inc.

2013-01-21T14:23:00.001-05:00

In Crossman v. Life Care Centers of America, Inc., the North Carolina Court of Appeals recently upheld the invalidation of a healthcare arbitration agreement as impossible to perform due to a failure of material terms. In January 2011, while serving as the administrator of her husband’s estate, Lucille Crossman filed a wrongful death complaint against the Defendants, who own, operate, and manage the assisted living facility in Hendersonville in which Ms. Crossman’s husband resided before his death. When Mr. Crossman entered the facility in 2004, he signed an agreement in which he stipulated that the parties agreed to submit all claims arising out of his care and treatment at the facility to binding arbitration. The agreement also specified that such disputes would go before an arbitration hearing before a board of three arbitrators selected from the American Arbitration Association (“AAA”) and that the arbitrators would apply the rules of the AAA. Ms. Crossman did not sign the agreement.

When Ms. Crossman filed the wrongful death complaint, the Defendants filed a motion to dismiss and compel arbitration based on the terms of the arbitration agreement. The trial court denied the motion, holding that the agreement was unenforceable because it was impossible to perform due to a failure in its material terms and because arbitration agreements signed by decedents do not bind wrongful death beneficiaries.

On appeal, the Court agreed that the arbitration agreement was unenforceable. The Court explained that effective January 1, 2003, the AAA had issued a Healthcare Policy Statement informing all potential parties to an arbitration agreement in the field of healthcare that the AAA would no longer accept the arbitration of cases involving individual patients without a post-dispute agreement to arbitrate. Because the agreement had been signed before a dispute arose, and because the agreement stipulated that arbitration must occur under AAA rules and be presided over by persons approved by the AAA, the Court held that the agreement was unenforceable because it was impossible to perform due to a failure in material terms.

The Court distinguished the case from its earlier holding in Westmoreland v. High Point Healthcare Inc., ___ N.C. App. ___, 721 S.E.2d 712 (2012), in which the Court held that a pre-dispute arbitration agreement signed on admittance to a nursing facility was enforceable. In that case, the agreement stipulated that any arbitration must follow the rules of the AAA and be conducted before one neutral arbitrator selected in accordance with the rules of the AAA. The Court held that the agreement was not impossible to perform despite the existence of the AAA Policy Statement, because it did not preclude arbitration of the claims by a non-AAA arbitrator. Here, in contrast, the agreement stated that the arbitration would be conducted by arbitrators selected from the AAA. It specifically required the use of AAA arbitrators and was, therefore, unenforceable as impossible to perform.

Interestingly, the Court declined to reach the second question posed by the appeal: whether Ms. Crossman, as a beneficiary of Mr. Crossman’s estate, would be bound by her husband's assent to the arbitration agreement. That question remains for another day. . .

Court of Appeals Opinions

2013-01-15T08:48:00.002-05:00

This morning the North Carolina Court of Appeals released opinions, including 23 published opinions. Stay tuned for the highlights.

Governor Perdue Appoints Mark Davis to NC Court of Appeals

2012-12-31T14:16:00.002-05:00

Today Governor Perdue appointed Mark Davis, her general counsel for the past two years, to the open seat on the North Carolina Court of Appeals. Davis will be filling a seat left vacant by Perdue's appointment of Cheri Beasley to the Supreme Court of North Carolina.

http://www.charlotteobserver.com/2012/12/31/3757477/perdue-makes-four-judicial-appointments.html

Court of Appeals Opinions

2012-12-18T15:40:00.002-05:00

This morning the North Carolina Court of Appeals released opinions, including 28 published opinions. We will have more on any cases of interest later.

NC Supreme Court Opinions

2012-12-14T19:10:00.000-05:00

Today the NC Supreme Court issued thirteen opinions, eight of them civil. We'll be back with posts on some of these cases shortly.

Governor Perdue Appoints Beasley to North Carolina Supreme Court

2012-12-13T09:12:00.000-05:00

On Wednesday, Governor Perdue announced that she has appointed Court of Appeals Judge Cheri Beasley to fill the vacancy on the North Carolina Supreme Court. Here's the link to the Governor's press release. Beasley will fill the open spot created when Justice Timmons-Goodson retired earlier this year.

Beasley was elected to the Court of Appeals in 2008. Prior to her service on the appellate bench, Beasley served as a District Court judge for almost ten years. Before becoming a judge, Beasley spent five years as an assistant public defender. More biographical information can be found here.

The selection of Beasley creates an open position on the Court of Appeals.

Appellate Rules Committee Revises Appellate Style Manual

2012-12-06T17:18:00.002-05:00

The Appellate Rules Committee of the North Carolina Bar Association has recently published a revised Appellate Style Manual. This practical guide to handling North Carolina appeals, which includes guidance on interpreting and complying with the Rules of Appellate Procedure, helpful timetables, and examples of the components of typical appellate filings, can be an invaluable resource for any appellate lawyer. Whether you are new to the practice of appellate law or an experienced appellate practitioner, this Manual is a must-read.

Please also note that the Rules Committee has published an Oral Argument Guide for Appellate Counsel, both for the Supreme Court and the Court of Appeals.

Perdue Suspends Judicial Nominating Commission

2012-12-05T18:32:00.003-05:00

As I mentioned in an earlier post, the limited time left in Governor Perdue's term meant that it would be difficult for her to utilize her Judicial Nominating Commission to fill the vacancy that will be created on the North Carolina Supreme Court when Justice Timmons-Goodson resigns on December 17, 2012. In the days that followed the announcement of Justice Timmons-Goodson's resignation, Governor Perdue asserted that she would fill the vacancy, even if it meant modifying or repealing the Executive Order which established the Judicial Nominating Commission. See stories here, here, and here.

Perdue's willingness to modify or repeal Executive Order 86 was met with harsh criticism from North Carolina Senate President Pro Tem Phil Berger who said such action would constitute "one more example of the rank hypocrisy soiling her legacy." Carrie Severino, Chief Counsel and Policy Director for the Judicial Crisis Network, writing on National Review Online's Bench Memos blog, was also critical of this proposed course of action.

Despite the criticism from the right, today Governor Perdue issued Executive Order 137 which suspends the Judicial Nominating Commission's role in filling vacancies until the end of her term. Despite feeling that it was necessary to suspend the Commission's role in the judicial selection process, Perdue "urge[d] future governors to continue utilizing the Commission to assist them in filling judicial vacancies for all of the reasons set forth in Executive Order No. 86."

It will be interesting to see how this unusual process impacts the individuals appointed to fill judicial vacancies that will open up between now and the end of Governor Perdue's term (rumors have it that there will be at least one more opening on the Supreme Court) and the viability of the Judicial Nominating Commission in the McCrory administration.

COA Reverses Order Denying Motion to Compel Arbitration

2012-12-04T08:46:00.002-05:00

Generally speaking, the North Carolina Rules of Civil Procedure do not require trial courts to make findings of fact when disposing of motions. However, in Cornelius v. Lipscomb, Judge Martha A. Geer, joined by Chief Judge John C. Martin and Judge Donna Stroud, explained that orders addressing motions to compel arbitration present an exception to this rule.

In reviewing an order denying a motion to compel arbitration, Judge Geer explained that "[t]his court has repeatedly held that 'an order denying a motion to compel arbitration must include findings of fact as to whether the parties had a valid agreement to arbitrate and, if so, whether the specific dispute falls within the substantive scope of that agreement.'" A failure to include those findings will result, as it did in this case, in the Court of Appeals reversing the trial court's order and remanding the case for entry of an appropriate order.

Judge Geer's opinion also reminded trial courts that if they find "that the parties did enter into an arbitration agreement, the court must also address whether the Federal Arbitration Act ("FAA") or the North Carolina Revised Uniform Arbitration Act applies as to the agreement."

While the Court of Appeals' opinion is directed to the trial courts, as most practicing attorneys know, these types of orders are generally drafted by counsel for the parties and submitted to the trial court for the judge's signature. A proposed order on a motion to compel arbitration that does not contain the necessary findings of fact and conclusions of law is a sure way to spend a great deal of your time and your client's money on an appeal that is certain to result in the lower court's opinion being reversed.

Court of Appeals Opinions

2012-12-04T08:20:00.000-05:00

This morning the North Carolina Court of Appeals released opinions in 21 cases. We will have more on any cases of interest later.

Justice Timmons-Goodson Resigns

2012-11-28T13:11:00.001-05:00

The Raleigh News and Observer is reporting that North Carolina Supreme Court Justice Patricia Timmons-Goodson will resign her seat from the North Carolina Supreme Court. Justice Timmons-Goodson has served on the North Carolina Supreme Court since being appointed by then-Governor Mike Easley in 2006.

The vacancy creates an interesting situation for Governor Perdue. The North Carolina Constitution provides the Governor with the authority to fill judicial vacancies, such as this one, that occur between elections. However, in 2011, Governor Perdue issued an executive order delegating almost all of her authority to fill judicial vacancies to an 18 person judicial nominating commission. The Commission has up to six weeks, unless the Governor specifies a shorter time, to nominate three individuals to fill the vacancy. The Governor, after allowing a period for public comment, must choose one of the three nominees to fill the vacancy.

Given that only slightly more than four weeks remain in Perdue's time in office, there is an awful lot of work that needs to be done to fill the vacancy prior to Governor-elect Pat McCrory taking office. Upon taking office, McCrory will need to decide if he wants to allow the Executive Order, which claims to be binding on future governors, and the judicial nominating commission to remain in place, rescind the executive order and make the appointment on his own, or replace it with a method of judicial selection of his own choosing.

Updated:

Some question has arisen whether the Judicial Nominating Commission is advisory or mandatory.

The final Whereas clause in the Executive Order provides as follows (emphasis is mine):

WHEREAS, it is my belief that the State of North Carolina can best achieve this goal by establishing a judicial screening commission composed of outstanding lawyers and laypersons from all quarters of the State, to assist me in exercising these important constitutional duties.

However, the body of the Executive Order, which actually implements this purpose, states as follows (again, emphasis mine):

Section 1. Purpose and Scope of this Executive Order

On and after July 1, 2011, when a vacancy occurs in the office of ... Associate Justice of the Supreme Court ... the Judicial Nominating Commission established by this Order shall nominate, from among applicants for appointment to any such vacancy, the three persons it determines most qualified to fill the vacancy, and the Governor will appoint one of those persons to the position....

The use of the words "shall" and "will" instead of "may" tend to indicate that the Governor must utilize the Commission process to fill the vacancy, the Commission must nominate three people for the vacancy, and the Governor must appoint one of the Commission's three nominees to fill the vacancy.