Title: Conference of NC Superior Court Judges Recent Decisions
1Conference of NCSuperior Court JudgesRecent
Decisions
- Don Cowan
- Smith Moore LLP
- 16 June 2006
1
2LIABILITY
2
3Motor Vehicles
3
4Osetek v. Jeremiah(NC 2006) (1)
Issue When the plaintiff introduced medical
bills totaling 15,554.30, whether the trial
court should have instructed the jury as to the
mandatory presumption on the issue of medical
damages in N.C.G.S. 8-58.1?
4
5FACTS
- The plaintiff was stopped at a stop sign when she
was struck in the rear by the defendants
vehicle. - The plaintiff introduced evidence of medical
bills totaling 15,554.30. The plaintiffs
treating chiropractor testified about the
plaintiffs injuries. - The trial court granted the plaintiffs motion
for a directed verdict on the issue of
contributory negligence. - The jury found the defendant negligent and
awarded the plaintiff 600.
5
6HELD Affirmed
- G.S. 8-58.1 does create a rebuttable mandatory
presumption as to the reasonableness of medical
expenses. - The parties did not stipulate to the plaintiffs
medical expenses, therefore, this was an issue
for the jury to decide. - The defendants rebuttal evidence questioned the
relationship between the medical expenses and the
accident. - The trial judge properly refused to give the
mandatory presumption on the issue of medical
damages.
6
7Hofecker v. Casperson (NC 2005) (2)
- Issues
- When the defendants vehicle struck the plaintiff
as the plaintiff was walking along the highway at
night and the defendant testified that the
plaintiff was wearing dark clothing and came out
of nowhere and walked directly into the path of
my car, whether the trial court properly granted
the defendants motion for summary judgment on
the issue of contributory negligence? - 2. When the evidence indicated that the
plaintiff was struck while located in the
roadway, whether this fact without additional
evidence that the defendant was negligent in the
operation of his vehicle or could have avoided
the accident is sufficient to defeat the
defendants motion for summary judgment on the
issue of last clear chance?
7
8FACTS
- The plaintiff was walking home from work on
1 November 2001 at about 655 p.m. and was
wearing dark clothes. There were no street
lights in the area. - The defendant testified that he caught a
glimpse of the plaintiff and that the plaintiff
came out of nowhere, walked directly into the
path of my car. - The trial court granted the defendants motion
for summary judgment on contributory negligence
and last clear chance.
8
9HELD Affirmed
- The evidence was clear that the plaintiff was
walking on the highway with his back to traffic. - The accident happened on an unlighted road and
the plaintiff was wearing dark clothing. - At the plaintiffs deposition, he admitted that
he would not have seen the headlights on the
defendants vehicle because they were coming
behind you. - Since the defendant first saw the plaintiff when
the plaintiff was in front of the defendants car
and the defendant had no opportunity to avoid
hitting the plaintiff, the plaintiff was
contributorily negligent as a matter of law.
9
10HELD Affirmed (Contd.)
- The plaintiffs evidence opposing summary
judgment did not forecast any facts showing that
the defendant was negligent in the operation of
his vehicle, such as speeding, not keeping a
proper lookout or should have seen the plaintiff.
Even if the plaintiff was struck while in the
road, this is not sufficient to deny the
defendants motion for summary judgment on last
clear chance.
10
11Ligon v. Matthew Allen Strickland (NC App 2006)
(4)
- Issues
- When the plaintiff testified that he was walking
along the side of the road when he was struck by
the defendants vehicle, but the plaintiffs
evidence also included testimony by the
investigating highway patrolman that the
plaintiff was in the road at the time he was
struck, whether the trial court should have
submitted the issue of contributory negligence to
the jury? - When the defendant testified that he swerved in
the road to avoid hitting an animal, whether an
instruction of sudden emergency should have been
given, and, if so, whether the sudden emergency
instruction should state that the doctrine
applies when the driver is confronted with
imminent danger to himself or others?
11
12FACTS
- The plaintiff alleged that he was walking along
the side of the road at night when he was struck
by the defendants vehicle. - The plaintiff was wearing dark clothing. He
testified that he heard a whoosh, then recalled
nothing until he woke up in the hospital. - Before the accident, the plaintiff had been to a
ball game and drank a bottle of beer. His blood
alcohol level at the hospital was .08.
12
13FACTS (Contd.)
- The defendant testified that he saw an animal in
the road. When he swerved to avoid the animal,
he went off the road and struck a fence. The
defendant continued driving. When he arrived at
home and told his father what had happened, the
defendant and his father returned to the scene of
the accident and saw the plaintiff in the fence. - The plaintiff told the investigating highway
patrolman that he was in the roadway at the
time he was hit. - The trial court refused the defendants request
to instruct on contributory negligence.
13
14HELD Reversed and new trial ordered
- The trial court should have instructed on
contributory negligence. Although the plaintiff
denied that he was in the road at the time he was
hit, the plaintiff called the highway patrolman
as a witness and relied on his testimony to
establish the defendants negligence. - The jury should have had the opportunity to
determine whether the plaintiff was in the road
at the time he was hit. When combined with the
plaintiffs intoxication and the fact that he was
wearing dark clothes while walking along the road
at night, contributory negligence was for the
jury. - The trial judge modified the sudden emergency
instruction, N.C.P.I. Div. 101.15 to state that
it did not apply if only a non-human animal is
in danger. At the time of the new trial, the
instruction should focus on whether the driver
was suddenly and unexpectedly confronted with
imminent danger to himself or others.
14
15Croom v. Humphrey(NC App 2006) (6)
Held When N.C.G.S. 20-150(d) prohibits
crossing the centerline of a highway at a curve
and the defendants lane was marked with a broken
yellow line, the defendant was permitted to pass
if he could do so safely. Centerline as used
in the statutes means a solid yellow line,
which indicates that passing from the adjacent
lane is forbidden.
15
16Oakes v. Wooten (NC App 2005) (7)
- Issues
- Even though the plaintiff had the green light
when entering the intersection, whether the trial
court should have instructed on contributory
negligence based on failure to keep a proper
lookout and failure to exercise reasonable care? - Whether the trial court properly sanctioned the
defendant for failing to admit the defendants
motor vehicle violations, agency and that the
defendants negligence was the sole proximate
cause of the plaintiffs injuries?
16
17FACTS
- The plaintiff testified that he exited I-85 onto
south Main Street in Graham and entered the
intersection on a green light. - The defendant testified that she failed to stop
for the red light and collided with the
plaintiffs car. - Based on the plaintiffs testimony that he
surveyed the intersection before entering it
and did not see the defendant, the trial court
refused to instruct on contributory negligence. - The jury awarded the plaintiff 119,000.
17
18HELD
- The trial judge properly refused to instruct on
contributory negligence. - Taking the evidence in the light most favorable
to the defendant, the evidence fails to show that
the plaintiff could have done anything to avoid
the accident or that there was anything to put
the plaintiff on notice that the defendant would
fail to stop at the red light. - Â The defendant testified that she was not
traveling at a high rate of speed and did not
enter the intersection until the plaintiff had
turned in front of her.
18
19HELD (Contd.)
- The trial court abused its discretion in
sanctioning the defendant. - At the time the plaintiff submitted the requests
to admit, discovery had not begun. - The defendant had no facts upon which to
consider the requests to admit relating to the
plaintiffs injuries and contributory negligence. - At the time of the defendants response,
reasonable grounds existed to believe that they
might prevail on some matters denied.
19
20Premises
20
21Herring v. Food Lion, L.L.C.(NC 2006) (10)
Issue When plaintiff injured his knee on a
stock cart at defendants store, but presented no
evidence as to who placed the cart in its
position, how long it had been in that position
and if the defendant knew or should have known of
its position, whether the trial court properly
granted the defendants motion for a directed
verdict?
21
22FACTS
- The plaintiff was pushing a shopping cart at the
defendants store. The plaintiff stopped at the
meat counter and walked to a soft drink display. - After picking up a bottle, the plaintiff turned
to walk back to his shopping cart. - The plaintiffs knee struck a stock cart. The
plaintiff testified that he did not see the cart
and that it was hidden. - The stock cart was lower than the plaintiffs
knee. - The plaintiff left the store without reporting
the injury. - The trial court granted the defendants motion
for a directed verdict.
22
23HELD Affirmed
- On the issue of negligence, the plaintiff
produced no evidence concerning who placed the
cart in its position, when it was placed there or
how long it remained in that position. - Vendors at the store had access to the stock
cart. - There was also no evidence as to how long the
stock cart had been in the position and whether
the defendant knew or should have known of its
position.
23
24Grayson v. High Point Development(NC App 2006)
(11)
Issue When it had snowed for two days at
plaintiffs place of employment and plaintiff
knew that the parking lot where her car was
parked was covered with ice, whether the owner of
the parking lot had a duty to warn the plaintiff
of the hazardous conditions at the parking lot?
24
25FACTS
- The plaintiff was employed at Belks at the Oak
Hollow Mall in High Point. - A heavy snow had fallen on 25 and 26 January
2004. - As the plaintiff left work and was walking to her
car in the parking lot, she slipped on ice and
fell. - At her deposition, the plaintiff testified that
she knew the condition of the parking lot and had
told another employee that somebodys going to
get killed out there. - The trial court granted the defendants motion
for summary judgment.
25
26HELD Affirmed
- There is no duty to warn the plaintiff of
conditions of which she was aware and of which
she had superior knowledge to the defendant. - Â
- A landowner is under no duty to protect a
visitor against dangers either known or so
obvious and apparent that they reasonably may be
expected to be discovered.
26
27Bailey v. Handee Hugos Inc. (NC App 2005) (12)
Issue When the adjuster for the defendants
liability insurance company misrepresented the
identity of the owner of the premises where the
plaintiff fell, but the identity of the owner
could have been found in the records of the
Register of Deeds, whether the trial court
properly dismissed the action for failure to name
the correct defendant?
27
28FACTS
- The plaintiff fell and was injured at Handee
Hugos on 18 April 2001. - The plaintiff was contacted by an adjuster for
Federated Mutual Insurance Company and told that
the Federated insureds were Handee Hugos and
Sampson-Bladen, the operator of the store. - Suit was filed on 29 March 2004 against Handee
Hugos and Sampson-Bladen.
28
29FACTS (Contd.)
- The defendant filed a motion to dismiss on the
grounds that the store was leased and operated by
United Energy. - On 19 July 2004, the plaintiff filed a motion to
amend to add United Energy as an additional
defendant. - The trial court denied the plaintiffs motion to
amend and allowed the defendants motion to
dismiss.
29
30HELD Affirmed
- Hatcher v. Flockhart Foods (NC App 2003) and
equitable estoppel did not apply. - In Hatcher, there was active misrepresentation
as to the insured and there was no public record
as to the responsible party. - In the present case, a search of the Register of
Deeds would have identified the owner of the
store. - Although the Court of Appeals found the
misrepresentation reprehensible, dismissal was
affirmed.
30
31Wallen v. Riverside Sports Center(NC App 2005)
(13)
Issue Whether defendants/landowners had a
duty to exercise reasonable care concerning trees
on their property that was next to a navigable
river?
31
32FACTS
- Defendants owned boat ramp on the Cape Fear
River. - Plaintiff was in a boat and using the boat ramp
to get off the river as a storm approached. - While the plaintiff was waiting at the boat ramp,
a tree fell on the plaintiff causing injuries
that rendered the plaintiff a paraplegic. - The plaintiffs expert testified that the tree
that fell was extensively decayed and showed
evidence of the decay through many dead branches. - The trial court granted the defendants motion
for summary judgment.
32
33HELD Summary judgment reversed.
- The defendants had a duty to exercise reasonable
care concerning natural conditions such as trees
on their land. - The defendants were liable only if they had
actual or constructive notice of a dangerous
natural condition existing upon their land. - The tree that fell on the plaintiff had broken
off once before the date of the plaintiffs
injury and showed signs of decay. - There was a genuine issue of material fact on the
issue of the defendants negligence.
33
34Freeman v. Food Lion(NC App 2005) (15)
- Issues
- Whether Food Lion/owner of store had duty to warn
the plaintiff of hidden dangers? - Whether the plaintiffs failure to plead that the
individual defendant was the agent or employee of
the corporate defendants barred the plaintiff
from making this argument on appeal?
34
35FACTS
- The plaintiff was shopping at the Food Lion store
when she was struck by a buffing machine operated
by Robinson who was wearing ear phones. - Robinson had previously knocked down orange cones
at the front of the store. - The plaintiff sued Food Lion, Budget Services
(the company contracting with Food Lion to
maintain the floors), Franks Floor Care (the
company contracting with Budget Services to
maintain the floors) and Amron Janitorial (the
employer of Robinson). - The trial court granted the motions for summary
judgment of all defendants.
35
36HELD Summary judgment reversed as to Food Lion
affirmed as to all other defendants.
- As to the plaintiffs argument on appeal that
Robinson was the agent or employee of the
defendants, this relationship had not been
pleaded in the complaint. The plaintiff may not
make a different legal argument on appeal that
was not made in the pleadings or before the trial
court. - Since neither Budget Services nor Franks Floor
Care owned or operated the store, they had no
duty to the plaintiff and may not be held liable
under a theory of premises liability.
36
37HELD Summary judgment reversed as to Food Lion
affirmed as to all other defendants. (Contd.)
- As owner of the store, Food Lion had a duty to
keep the premises safe and warn the plaintiff of
hidden dangers. There were genuine issues of
material fact as to whether (a) Food Lion
warned the plaintiff of the buffing (b) Food
Lion used ordinary care in providing safe
premises (c) the buffing machine presented an
obvious danger and (d) a reasonably prudent
person should have noticed the buffing machine
and avoided the collision.
37
38Employment
38
39Little v. Omega Meats I, Inc.(NC 2005) (17)
Issue Whether defendant is liable for
assault committed by independent contractor of
defendant?
39
40FACTS
- Omega Meats sold meat products through
independent contractor salesmen. - The salesmen rented refrigerator trucks and
attempted to sell the meat door to door. - Omega did not supervise the salesmen and did not
identify areas for meat to be sold. - Smith, an independent contractor salesman, had
been convicted of robbery and kidnapping. He
served a prison sentence for these crimes. Omega
did not conduct a background check on Smith
before he was employed.
40
41FACTS (Contd.)
- Smith parked his refrigeration truck in the
driveway next to the plaintiffs house. He broke
into the plaintiffs house and assaulted the
plaintiffs. - The trial court granted Omegas motion for a
directed verdict at the close of the plaintiffs
evidence.
41
42HELD Affirmed.
- Omega owned no duty to the plaintiffs.
- Smith was not in the plaintiffs home as a result
of any activities on behalf of Omega. - Employers do not owe a legal duty to victims of
their independent contractors intentional torts
that bear no relationship to the employment. - Even if Omega were negligent in hiring Smith,
Smiths employment did not advance his criminal
endeavor in any manner. The result would have
been the same if Smith had not been driving an
Omega truck.
42
43INSURANCE
43
44Motor Vehicle
44
45Hernandez v. Nationwide Mutual Ins. Co., (NC
App 2005), review denied (20)
Issue When Nationwides insured was driving
a car she was purchasing, but title to the car
had not been transferred to the insured, whether
the car was a non-owned vehicle that was not
furnished for the regular use of the insured,
and, therefore, the vehicle was insured?
45
46FACTS
- Ms. Norris, the Nationwide insured, was in the
process of purchasing a 1997 Blazer, when she was
involved in an automobile accident with the
plaintiff. - All paperwork for the purchase of the Blazer had
been completed, but title to the Blazer had not
been transferred to the insured. - The trial court granted the plaintiffs motion
for summary judgment finding that Nationwide had
coverage.
46
47HELD Affirmed.
- Under G.S. 20-72(b), all cars which are not
owned are insured except those furnished for the
regular use of the insured or his relative. - Because at the time of the accident, the Blazer
was not furnished for the insureds regular use
and title had not been transferred, the
Nationwide exclusion did not apply. There was
coverage for the accident.
47
48McGuire v. Draughon(NC App 2005) (22)
Issue When the defendant drove a Ford
Explorer two or three times a week that was owned
by her mother-in-law, whether the Explorer was
furnished for the regular use of the defendant,
and, therefore, there was no coverage?
48
49FACTS
- At the time of the accident, Mollie Draughon was
operating her mother-in-laws Ford Explorer. - Mollie Draughon and her husband lived next door
to Betty Draughon. The Explorer was always
parked in the common driveway between the two
houses. Mollie and her husband had 3 keys to the
Explorer and did not have to ask for permission
to use it. - Mollie Draughon testified that she drove the
Explorer two or three times a week to run
errands, go to work and take Betty Draughon to
places she needed to go.
49
50FACTS (Contd.)
- Mollie Draughon and her husband were insured by
Farm Bureau. The Farm Bureau policy excluded
coverage for vehicles furnished for the insureds
regular use. - The trial court granted Farm Bureaus motion for
summary judgment finding no coverage.
50
51HELD Affirmed.
- Factors to be considered in determining whether a
vehicle is furnished for the regular use of the
insured are (1) availability of the vehicle to
the insured and (2) frequency of use by the
insured. - Where an insured driver has the unrestricted use
and possession of an automobile, the certificate
of title for which is retained by another, the
car is furnished for the regular use of the
insured driver. - Mollie Daughons use of the Explorer was
consistent as well as continuing. - Regular use does not require daily use.
51
52Underinsured/Uninsured
52
53Sawyers v. Farm Bureau Ins.(NC 2005) (24)
Issue When the plaintiff was involved in a
motor vehicle accident in Florida with an
uninsured motorist and brought suit in Florida
against the uninsured motorist and the
plaintiffs uninsured carrier, but the carrier
was dismissed from the Florida action for lack of
jurisdiction, whether the carrier was bound in a
suit in North Carolina by the Florida judgment
against the uninsured motorist under N.C.G.S.
20-279.21(b)(3) because the uninsured carrier had
been served with a copy of the summons and
complaint in the Florida action?
53
54FACTS
- The plaintiff was a passenger in a car involved
in an automobile accident in Florida on 10 August
1996. - The driver of the other vehicle was uninsured.
- The plaintiff was covered by an uninsurance
policy with Farm Bureau. - Suit was brought in Florida against the uninsured
driver and Farm Bureau. Service on Farm Bureau
was through the North Carolina Commissioner of
Insurance. - Farm Bureau was dismissed from the Florida suit
for lack of jurisdiction.
54
55FACTS (Contd.)
- Judgment was entered in Florida for the plaintiff
against the uninsured motorist for 200,000. - The present suit against Farm Bureau was to
enforce the Florida judgment under N.C.G.S.
20-279.21(b)(3) providing that the insurer shall
be bound by a final judgment if the insurer had
been served with a copy of the summons and
complaint. - The trial court granted Farm Bureaus motion for
summary judgment. - The Court of Appeals reversed on the grounds that
Farm Bureau had been served in the Florida action
and was bound by the judgment.
55
56HELD Trial court affirmed
- Since Farm Bureau was dismissed from the Florida
action for lack of jurisdiction, Farm Bureau was
never a party in the Florida lawsuit. - In order for N.C.G.S. 20-279.21(b)(3) to apply,
Farm Bureau would have to have been a party to
the Florida action. - The mere providing of notice of the action is
not sufficient for Farm Bureau to be bound. - Based also on lack of jurisdiction over Farm
Bureau in Florida, the action was also barred by
the three-year statute of limitations since the
accident occurred on 10 August 1996 and suit was
not brought in North Carolina against Farm Bureau
until 11 April 2002.
56
57Life
57
58Duncan v. CUNA Mutual Ins. Society(NC App 2005)
(27)
- Issues
- Whether the toxicity findings in an autopsy
report were sufficient to exclude coverage under
a life insurance policy that provided an
exclusion for voluntary use of a drug except as
prescribed by a physician? - Whether affidavit relying on hearsay,
non-first-hand facts was sufficient to deny
summary judgment?
58
59FACTS
- Decedent was insured under life insurance policy
with CUNA that excluded coverage for voluntary
use of any drug . . . except as prescribed by a
physician. - The decedent was found in his living room. The
autopsy report indicated that the cause of death
was methadone toxicity.
59
60FACTS (Contd.)
- In opposition to CUNAs motion for summary
judgment, the decedents estate presented the
affidavit of a substance abuse counselor stating
that the decedent had been counseled for alcohol
and substance abuse. The affidavit did not
contain first-hand information about the
decedents use of methadone. - The trial court granted CUNAs motion for summary
judgment.
60
61HELD Affirmed.
- The autopsy report established that the cause of
death was methadone toxicity. When CUNA
presented the autopsy report, the burden shifted
to the decedent to demonstrate an issue of fact
concerning the use of the drug being prescribed
by a doctor. - The counselors affidavit was not sufficient to
defeat summary judgment because it was not based
on first-hand information.
The affidavit did not meet the requirements of
Rule 701 because it was based on hearsay and
offered opinions that were not of an expert.
61
62Exclusion for Intentional Acts
62
63Allstate v. Lahoud(NC 2005) (29)
- Issues
- When insured pleaded guilty to charge of taking
indecent liberties with a minor, whether plea
established that coverage was excluded under
policy provision excluding coverage for any
intentionally harmful act of the insured? - Whether insureds affidavit contending that his
conduct was unintentional or negligent was
sufficient to deny summary judgment to Allstate?
63
64FACTS
- Insured was charged with taking indecent
liberties with a nine-year old. - The State allowed the insured to plead guilty in
exchange for a suspended sentence, an apology and
payments of therapy bills for the child. - The present declaratory judgment action arose
when the child and his parents filed a civil
action for sexual assault.
64
65FACTS (Contd.)
- The plaintiffs policy excluded coverage for any
intentionally harmful act or omission of an
insured. - The trial court granted Allstates motion for
summary judgment.
65
66HELD Affirmed.
- The insured pleaded guilty and apologized to the
child and his family. - The guilty plea established that the defendant
had the intent to commit the act. - A nonmovant may not generate a conflict simply
by filing an affidavit contradicting his own
sworn testimony where the only issue raised is
credibility. - The insured could defeat summary judgment on the
issue of his intent by evidence other than his
own affidavit or deposition contradicting his own
testimony.
66
67Independent Insurance Adjusters
67
68Koch v. Bell, Lewis Associates, Inc.(NC App
2006) (31)
Issue Whether a third-party, non-insured may
sue an independent insurance adjuster for
negligence and unfair and deceptive trade
practices?
68
69FACTS
- The home of the plaintiffs had synthetic stucco
applied by Quality Stucco Systems. When the
plaintiffs discovered that the stucco was
defective, a claim was filed against Quality. - Quality was insured by Southern Guaranty
Insurance. - Bell, Lewis was the adjuster for Southern
Guaranty. - Bell, Lewis told the plaintiffs that Southern
Guaranty would pay for the cost of repairs, but
only if the repair work was done by Quality.
69
70FACTS (Contd.)
- The plaintiffs agreed. The plaintiffs were paid
10,000 and signed a general release. - The repair work by Quality was also defective.
- The plaintiffs sued Quality, Southern Guaranty
and Bell, Lewis for negligence and unfair and
deceptive trade practices. - The trial court dismissed all claims against all
defendants.
70
71HELD Affirmed
- Independent adjusters owed no duty to the
plaintiffs who were not the insureds of Southern
Guaranty, therefore, there was no claim for
negligence. - Since North Carolina does not recognize a cause
of action for unfair and deceptive trade
practices by a third-party against an insurance
company of the adverse party, the claims for
unfair and deceptive trade practices were
properly dismissed. - The general release applied to all claims, past
and future, arising from the acts of Quality,
therefore, this was an additional reason
supporting dismissal.
71
72Unfair and DeceptiveTrade Practices
72
73Page v. Lexington Ins. Co. (NC App 2006) (32)
- Issues
- Whether alleging violations of claims practices
under N.C.G.S. 58-63-15(11) as grounds for a
claim under N.C.G.S. 75-1.1 is sufficient to
withstand a 12(b)(6) motion? - When the claim under N.C.G.S. 75-1.1 is based
on breach of the insurance contract and failure
to handle the plaintiffs claim properly, whether
the claim is governed by the four-year statute of
limitations applicable to unfair and deceptive
trade practice claims?
73
74FACTS
- An underground sewer line on the plaintiffs
property ruptured on 21 February 2001 and caused
property damage and personal injury to the
plaintiffs. - The plaintiffs filed a claim with the defendant.
When the claim was not settled, suit was filed on
28 July 2004 alleging breach of contract, bad
faith and unfair and deceptive trade practices. - The claim for unfair and deceptive trade
practices listed violations of the claims
procedures in N.C.G.S. 58-63-15(11).
74
75FACTS (Contd.)
- The trial court dismissed the claims for breach
of contract and bad faith due to the three-year
statute of limitations. - The trial court dismissed the unfair and
deceptive trade practices claims on two grounds
(1) insufficient pleading of the Chapter 75
claim and (2) the three-year statute of
limitations applicable to the underlying facts
rather than the four-year period for unfair and
deceptive trade practices.
75
76HELD Reversed
- Alleging violations of the claims handling
procedures in N.C.G.S. 58-63-15(11) is also a
violation of N.C.G.S. 75-1.1 without showing
frequency or general business practice. - The unfair and deceptive trade practices claim is
different and separate from the breach of
contract claims. The unfair and deceptive trade
practices claim is governed by the four-year
statute of limitations.
76
77Attorney-Client Privilege
77
78Nationwide Mutual Fire Ins. Co. v. Bourlon(NC
2005) (35)
- Issues
- When an insurance company retains an attorney for
its insured, whether the attorney has an
attorney-client relationship with the insurance
company and the insured? - Whether the attorney may have privileged
communications with the insured about coverage to
which the insurance company is not entitled to
access?
78
79- Issues (Contd.)
- Whether suit by the insured alleging bad faith
and negligent representation by the attorney
retained by the insurance company waives any
privilege? - Whether the attorney for the insurance company
should turn over his complete file to the
insurance company?
79
80FACTS
- Nationwide insures Bourlon under homeowners
policy with limits of 300,000. - Axarlis sues Bourlon alleging that one of
Bourlons dogs bit him. Claims alleged are
malicious prosecution, abuse of the criminal
process, and assault. - Nationwide retains Lee Patterson to defend
Bourlon. - Nationwide tells Bourlon that policy excludes
coverage for malicious prosecution and assault.
80
81FACTS (Contd.)
- Jury awards Axarlis 321,000 in compensatory and
punitive damages, including 150,000 in punitive
damages for the malicious prosecution claim. - Post-trial, Axarlis offers to settle for
236,000. Nationwide will contribute 200,000 if
Bourlon will pay 36,000. Bourlon refuses to
contribute to settlement. - Nationwide settles the covered claims with
Axarlis. Axarlis and Bourlon reach a separate
settlement of the malicious prosecution claim.
81
82FACTS (Contd.)
- Bourlon requests a copy of his file from
Patterson. - Nationwide files the present declaratory judgment
claim for a determination that it has no coverage
for the malicious prosecution claim settlement. - Bourlon counterclaims for bad faith, refusal to
settle, and unfair and deceptive trade practices. - Trial court rules that Nationwide did not have
coverage for the malicious prosecution claim.
82
83FACTS (Contd.)
- Nationwide deposes Bourlon on the remaining
claims. During Bourlons deposition, his counsel
instructs him not to answer questions concerning
his communications with Patterson. - Trial court rules (1) no attorney-client
relationship between Patterson and Nationwide
(2) there is attorney-client relationship between
Patterson and Bourlon and (3) Patterson breached
the attorney-client relationship with Bourlon by
giving his file to Nationwide.
83
84HELD
- There was a tripartite attorney-client
relationship in which Patterson represented
Bourlon and Nationwide. - Any communications between Patterson and Bourlon
relating to the defense for which the insurer
has retained the attorney are not privileged
under the common interest doctrine.
Communications between Bourlon and Patterson
about the malicious prosecution claim would be
privileged (such that Nationwide would not be
privy to any communications).
84
85HELD (Contd.)
- Any communications between Bourlon and Patterson
that did not relate to the underlying action are
privileged. Communications that relate to the
issue of coverage are not discoverable because
the interests of the insurer and the insured with
respect to the issue of coverage are always
adverse. - Bourlon, however, waived this privilege by
allegations of bad faith and negligent
representation by Patterson. - Because there may have been communications in
Pattersons file that were privileged as to
Nationwide, Patterson should have submitted his
file to the trial court in camera for the trial
judge to determine whether there were privileged
documents in the file.
85
86Commercial General Liability
86
87Bond/Tec, Inc. v. Scottsdale Ins. Co.(NC App
2005) (40)
Issue When defendant insurance company
relies on policy provision excluding coverage if
the insured voluntarily agrees to make payment,
whether the insurer is also required to show
prejudice from the actions of the insured?
87
88FACTS
- The plaintiff entered into a roofing contract
with the Newton-Conover Schools. - As a result of the failure of temporary roofing,
rain leaked into one of the schools and caused
damage. - The president of the plaintiff told the school
system that he would pay for the damage out of
his own pocket. - The defendant denied liability based on the
policy provision that No insured will, except at
that insureds own cost, voluntarily make a
payment, assume any obligations, or incur any
expense, . . . without our consent. - The trial court granted the defendants motion
for summary judgment.
88
89HELD Reversed
- As a matter of first impression, the insurer is
required to show prejudice before relying on the
voluntary payments exclusion. - The prejudice requirement must relate to the
ability to investigate or defend the claim.
89
90PRACTICE AND PROCEDURE
90
91Jurisdiction
91
92Charter Medical, Ltd. v. Zigmed(NC App 2005)
(41)
Issue When defendant entered into contract
with North Carolina resident and the contract
initially provided for manufacture, shipment and
installation of the defendants product at the
plaintiffs facility in New Jersey, with shipment
subsequently changed to occur in North Carolina,
whether the act of entering the contract with the
North Carolina resident was sufficient to
establish the minimum contacts needed for due
process?
92
93FACTS
- The plaintiff sent the defendant a proposal for
purchase and shipment of a blood bag
manufacturing machine to the plaintiffs North
Carolina office. - The plaintiff modified the proposal and agreed
that the machine would be installed in New
Jersey. - The parties later agreed that the machine would
be shipped to the plaintiffs facility in North
Carolina. Four technicians employed by the
defendant installed the machine in North
Carolina. - Although the trial court found jurisdiction under
the long-arm statute, N.C.G.S. 1-75.4(5)(e),
the trial court dismissed the action because the
defendant did not have minimum contacts to
satisfy due process.
93
94HELD Affirmed
- The mere act of entering a contract with a forum
resident does not provide the necessary contacts
when all elements of the defendants performance
are to occur outside the forum. - The defendant did not attempt to benefit by
entering the market in North Carolina. - Although part of the plaintiffs damages related
to installation of the machine in North Carolina,
most of the plaintiffs damages arose from
allegations that the machine was defective when
shipped from New Jersey.
94
95Havey v. Valentine(NC App 2005) (43)
HELD
- The defendants passive website containing
general information about the company but not
allowing purchases and not specifically
targeting North Carolina residents did not
subject the defendant to personal jurisdiction in
North Carolina.
95
96Banc of America Securities, LLC v.Evergreen
International Aviation, Inc.(NC App 2005) (45)
HELD
- Appellate review of issues involving personal
jurisdiction are limited to whether the findings
of fact by the trial court are supported by
competent evidence in the record. - The trial court is not required to make findings
of fact. - If the trial court does not make findings of
fact, the appellate court must assume that the
trial judge made factual findings sufficient to
support the decision in favor of the plaintiff.
96
97Statutes and Periodsof Limitation and Repose
97
98Whittaker v. Todd (NC App 2006) (47)
- Issues
- When the defendant guaranteed his work for as
long as you own the home, whether the
plaintiffs action for property damage was barred
by the six-year statute of repose? - In order for the defendant to obtain dismissal
based on the six-year period of repose, whether
the defendant is required to plead the period of
repose as an affirmative defense?
98
99FACTS
- The plaintiff contracted with the defendant in
1991 to replace the roof on the plaintiffs
house. - The defendant guaranteed the work for as long as
you own the home. - The plaintiff noticed in 2003 that part of the
roof had not been sealed and that water damage
had caused part of the roof to rot. - Suit was filed on 11 November 2003 in small
claims court. - After the defendants appeal to district court,
the district court granted the defendants motion
to dismiss based on the six-year period of repose
in G.S. 1-50(a)(5).
99
100HELD Affirmed
- Since the suit was for money damages and not
breach of warranty, the defendants guarantee
did not apply and the six-year period of repose
applied. - Complying with the period of repose is a
condition precedent to the right to file the
claim, therefore, the plaintiff was required to
establish compliance with G.S. 1-50(a)(5). The
defendant was not required to plead the period of
repose as an affirmative defense.
100
101Jack H. Winslow Farms, Inc. v. Dedmon, (NC App
2005), review denied (48)
HELD
- Fraud is an exception to the running of the real
property statute of repose in G.S. 1-50(a)
(5)e. Fraud is not an exception to the running
of the products liability statute of repose in
G.S. 1-50(a) (6).
101
102Res Judicata andCollateral Estoppel
102
103Nicholson v. Jackson County School Bd.(NC App
2005) (53)
- Issues
- When plaintiff has notice of hearing on a motion,
appears at the hearing and does not object,
whether the plaintiff waives any defects in the
notice of the hearing? - When plaintiff fails to appeal a prior superior
court order finding that the plaintiff did not
request a hearing on the issue of his discharge
within the statutory period, whether the present
action for breach of contract relating to the
plaintiffs discharge was barred by res judicata
and collateral estoppel?
103
104FACTS
- Plaintiff alleged that he was wrongfully
terminated as principal and denied a hearing as
required by statute. - The school board conducted a hearing, then
informed the plaintiff that he would be
terminated unless he requested a hearing within
14 days. - The plaintiff did request a hearing, but it was
after the 14-day period had expired. - On appeal to the superior court, the trial judge
denied the plaintiffs motion to remand for a
hearing before the school board. The plaintiff
did not appeal this order.
104
105FACTS (Contd.)
- The present suit was filed in district court for
breach of contract, wrongful termination and
failure to follow proper administrative
procedures. - Because the relief requested was more than
10,000, the defendant moved to transfer to
superior court. The defendant also filed a
motion to dismiss based on res judicata and
collateral estoppel. - The defendant gave notice of the hearing on the
motion to dismiss at the same time as the motion
to transfer was to be heard. - The trial court granted the motion to transfer to
superior court, then granted the motion to
dismiss.
105
106HELD Affirmed.
- When a party has notice of a hearing, then
appears at and participates in the hearing
without objection, that party waives any defects
in the notice of the hearing and the right to
request a continuance. - The prior superior court order related to the
same issues pending in the present suit,
therefore, the present suit was barred. - The focus of the prior superior court hearing
was the plaintiffs termination by the board and
his claim that he was denied a proper hearing.
Because the present suit is based on the same
contentions, it is barred by res judicata and
collateral estoppel.
106
107Pro Hac Vice Admission
107
108In re Cole (NC App 2006) (55)
- Issues
- Whether the trial court abused its discretion in
denying the motion to be admitted pro hac vice? - Whether the trial court properly imposed
sanctions for the plaintiffs failure to attend a
noticed deposition when the defendants had not
previously obtained an order compelling discovery
under Rule 37(d)?
108
109FACTS
- The plaintiffs retained Jones to represent them
in relation to the foreclosure of their house in
Elizabeth City. - Jones was licensed to practice law in Virginia.
- Jones appeared before the Clerk and requested a
continuance of the hearing because he had not
been able to associate North Carolina counsel. - The continuance was granted.
109
110FACTS (Contd.)
- Jones then filed a complaint contesting the
foreclosure and a motion to be admitted pro hac
vice. - A hearing on these motions was continued.
- Jones then moved for a preliminary injunction and
also requested that the injunction and
foreclosure motions be heard on 8 March 2004. - The Clerk denied the motion to continue and
ordered foreclosure.
110
111FACTS (Contd.)
- Jones filed an appeal from the order and also
filed a second action on behalf of the
plaintiffs. - The defendants noticed the depositions of the
plaintiffs. - Counsel for the defendants refused to allow the
depositions to be continued. - The plaintiffs did not appear at the times
noticed for their depositions.
111
112FACTS (Contd.)
- The defendants filed a motion for sanctions.
- The plaintiffs then filed a pro se complaint.
- The trial court denied Jones motion to be
admitted. - When the trial court denied the plaintiffs
motion for a continuance, the plaintiffs took a
voluntary dismissal without prejudice. - The trial court also fined Jones 5,000 for the
unauthorized practice of law and imposed
sanctions against the plaintiffs for failure to
appear at their depositions.
112
113HELD Affirmed
- The trial judge did not abuse his discretion in
denying Jones motion to be admitted pro hac
vice. - Jones had filed several motions and law suits
and appeared before the Clerk without associating
North Carolina counsel or being admitted to
practice. - An order directing compliance with discovery is
not a prerequisite to sanctions under Rule
37(d). The plaintiffs did not move for a
protective order. The trial court did not abuse
its discretion in imposing sanctions.
113
114Service
114
115Saliby v. Conners(NC App 2005) (59)
Issue Whether the affidavit of the
defendants father stating that he told the
deputy sheriff that the defendant did not live at
the residence where service was attempted was
sufficient to defeat the deputy sheriffs
affidavit of service under Rule 4(j)(1)(a)?
115
116FACTS
- Suit was filed for injuries received in an
automobile accident. - The deputy sheriff served the summons and
complaint on the defendants father at a
residence in Wake County. - Although the father accepted the summons and
faxed it to his son in Texas, the fathers
affidavit in support of the defendants motion to
dismiss stated that the father told the deputy
sheriff that his son had moved and accepted a new
job in Texas.
116
117FACTS
- The deputy sheriff filed a return indicating that
service was completed. - The trial court granted the defendants motion to
dismiss.
117
118HELD Reversed.
- The deputy sheriffs return of service indicates
legal service under Rule 4(j)(1)(a), which
results in a presumption of valid service of
process. - More than a single contradictory affidavit is
required to show improper service.
118
119Carpenter v. Agee(NC App 2005) (60)
Issue When the plaintiff filed an affidavit
of service by certified mail and a copy of the
signed return receipt, whether the defendants
affidavit stating that he had not resided at the
address shown in the plaintiffs affidavit since
2002 was sufficient to defeat service?
119
120FACTS
- Suit was filed for injuries received in an
automobile accident. - The summons and complaint were sent by certified
mail to the defendant at an address in San
Bernadino, California. - The return receipt was signed by the defendants
mother at the address to which the summons and
complaint were mailed.
120
121FACTS (Contd.)
- The plaintiff filed an affidavit of service by
certified mail and attached the signed return
receipt. - The defendant moved to dismiss and included his
affidavit stating that he had not lived at the
address since 2002. - The trial court granted the defendants motion to
dismiss.
121
122HELD Reversed.
- By filing a copy of the signed return receipt,
along with an affidavit that comports with
N.C.Gen.Stat. 1-75.10, the plaintiff is
entitled to a rebuttable presumption of valid
service. - Defendants single affidavit does not rebut the
presumption. - The affidavit merely states that the defendant
did not reside at the address. The affidavit
does not discuss whether his mother was
authorized to accept service for him.
122
123Rule 9(b) - Alleging Fraud
123
124Bob Timberlake Collections, Inc. v. Edwards(NC
App 2006) (62)
- Held
- When the defendants counterclaim alleging fraud
did not identify the representatives of the
plaintiff conveying the false information and did
not allege specifically where or when the
statements were made, the trial court properly
dismissed the counterclaim for fraud because they
were not pleaded with the particularity required
by Rule 9(b). - Â
124
125- Held (Contd.)
- When the defendants counterclaim alleging unfair
and deceptive trade practices stated only that
the plaintiffs conduct constitutes unfair and
deceptive trade practices and that such conduct
involved commerce, the trial court properly
dismissed the counterclaim because there was also
no allegation that the conduct was immoral,
oppressive, unscrupulous or substantially
injurious to consumers and there was no
allegation that the breach of contract was
accompanied by substantial aggravating
circumstances.
125
126Rule 11 - Sanctions
126
127Hill v. Hill(NC App 2005) (63)
- HELD
- The trial court properly entered sanctions under
Rule 11 and G.S. 6-21.5 totaling 116,276.69
because there was insufficient evidence to
establish a factual basis to prove any claims of
fraud. Inquiry by the plaintiffs attorney
would have produced evidence that there were no
grounds for the fraud allegations. - Only the appellate court may award sanctions for
frivolous appeals.
127
128HELD (Contd.)
- Sanctions for conduct during discovery may be
awarded under Rule 11 because they relate to the
insufficiency of the complaint. - Sanctions for fees and expenses during discovery
may be awarded after the hearing on the motion
for summary judgment because the plaintiffs Rule
11 violations were not determined until the
summary judgment hearing.
128
129Melton v. Tindall Corp. (NC App 2005) (65)
- Issues
- When the trial court dismisses all claims of the
plaintiff pursuant to Rules 37 and 41, whether
the standard of appellate review is for abuse of
discretion? - Whether the trial court properly considered the
plaintiffs invoking of the Fifth Amendment
privilege against self incrimination in
dismissing the complaint?
129
130FACTS
- After jury in another case found the defendant
liable in the collapse of a pedestrian walkway at
the Lowes Motor Speedway, the trial judge ruled
that the issue of liability had been established
in all cases by collateral estoppel. - The plaintiff in the present case alleged lost
profits and diminution in future earning capacity
arising from his self employment as a general
contractor. The plaintiff had built one house as
a general contractor.
130
131FACTS (Contd.)
- Despite discovery requests, motions to compel and
an order compelling production of the plaintiffs
income tax returns, the returns were not produced
until a second deposition of the plaintiff. This
return had no information about the one house
constructed. - When the plaintiff was asked about this house and
the failure to identify it on his tax return, he
invoked the Fifth Amendment privilege against
self-incrimination. - The trial judge dismissed all claims under Rules
37 and 41.
131
132HELD Affirmed.
- A trial judges imposition of sanctions under
Rule 37 is reviewed on appeal for abuse of
discretion. - A civil plaintiff who invokes the Fifth
Amendment to thwart discovery subjects his claim
to dismissal.
132
133Baker v. Speedway Motorsports, Inc.(NC App 2005)
(65)
HELD
- When the plaintiff did not identify an expert as
required by the courts scheduling order, the
trial judge did not abuse his discretion in
excluding the experts testimony. - When the plaintiff did not produce her medical
records concerning previous medical treatment for
her back, the trial judge did not abuse his
discretion in precluding the plaintiff from
introducing evidence that her back injury was
caused by the pedestrian walkway collapse.
133
134Rule 13(a) Compulsory Counterclaims
134
135Jonesboro United Methodist Church v.
Mullins-Sherman(NC 2005) (70)
Issue In dispute arising out of construction
contract, when contractor filed a suit for breach
of contract and contractor was granted summary
judgment by trial court, whether subsequent suit
by owner for breach of the construction contract
was a compulsory counterclaim in the previous
suit, and, therefore, barred?
135
136FACTS
- Batten entered into a contract with the plaintiff
to construct a fellowship hall. - Disputes arose about the quality of Battens
work. - The church sent a check for 101,000 to Batten
accompanied by a letter indicating that the check
was to satisfy the construction relationship. - The church then rescinded the letter and
agreement to resolve the differences.
136
137FACTS (Contd.)
- Batten filed suit in Forsyth Superior Court
seeking 101,000 in damages. The trial court
granted Battens motion for summary judgment, the
Court of Appeals affirmed and the Supreme Court
denied review. - The present suit was brought by the church in Lee
County Superior Court for breach of contract. - Batten filed a motion for judgment on the
pleadings on the basis that the present Lee
County claims were compulsory counterclaims in
the Forsyth County action. - The trial court denied Battens motion and the
Court of Appeals affirmed.
137
138HELD Reversed.
- Both the Forsyth and Lee County actions involved
allegations about whether Batten had performed
the construction in a satisfactory manner. - Because the federal and state versions of rule
13(a) are identical, the court relied on federal
cases for its analysis of whether counterclaims
were compulsory. The court found (1) issues of
law and fact in both suits were almost the same
(2) the same evidence related to both suits and
(3) there was a logical relationship between the
two suits.
138
139Discovery
139
140Miller v. Forsyth Memorial Hosp., Inc.(NC App
2005) (72)
Held When the plaintiff moved to compel
documents to be produced by the defendant that
were identified in the defendants privilege log,
and the trial court denied the plaintiffs motion
to compel, and the plaintiff did not make an
offer of proof or put other information in the
record concerning the documents requested, the
Court of Appeals had no basis to review the trial
courts denial of the motion to compel. The
plaintiff could have requested that the trial
court review the documents in camera and then
seal the documents for appellate review.
140
141Armstrong v. Barnes,(NC App 2005), review denied
(73)
- Issues
- Whether a discovery order involving a statutory
privilege is appealable? - Although testimony concerning the defendants
drug use occurred before a hospital board and is
protected by a statutory privilege, when the
defendant has independent knowledge of the same
facts, whether the privilege applies?
141
142FACTS
- The complaint alleged medical malpractice arising
from the defendants delivery of the plaintiffs
child in February 2000. - During the deposition of the defendant, the
defendants attorney objected and instructed the
defendant not to answer questions about his
history of drug abuse.
142
143FACTS (Contd.)
- The defendant then moved for a protective order,
but the trial court ordered the defendant to
answer questions about his drug use. - The defendant had a history of drug use before
delivery of the plaintiffs child. In order to
obtain credentialing at the hospital, the
defendant had to appear before the hospitals
board, which