North Carolina Lawyers Weekly October 25, 2021

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OCTOBER 25, 2021 ■ $8.50

ATTORNEYS, LAW FIRM

Fired cop can bring ‘fruits of labor’ claim against PD

NOT ENTITLED TO ABSOLUTE PRIVILEGE IN ELECTION PROTEST SUIT

■ BY HEATH HAMACHER hhamacher@nclawyersweekly.com

■ BY CORREY E. STEPHENSON BridgeTower Media Newswires A party to a quasi-judicial protest proceeding is entitled to absolute privilege in a libel suit being brought by a group of plaintiffs who were falsely accused of double voting in the 2016 election—but the lawyers, law firm and defense fund behind the election protest are not similarly protected, the North Carolina Court of Appeals has ruled. The 2016 election featured a tightly-contested gubernatorial race between then-incumbent Gov. Pat McCrory and challenger Roy Cooper. Vote tallies the morning after the election reflected McCrory trailed Cooper by only 5,000 votes. In response, the McCrory campaign formed the Pat McCrory Committee Legal Defense Fund and engaged lawyers with Holtzman Vogel Josefiak Torchinsky (HVJT) to work on its behalf. The lawyers compiled a list of names of potential double voters and prepared election protest forms to be filed with County Boards of Elections challenging purportedly ineligible voters. The defense fund decided that local voters, rather than McCrory himself, should file the protests. The fund identified William Clark Porter IV as a potential volunteer to file a protest. Porter agreed, and named Louis M. Bouvier and Karen and Samuel Niehans as having voted in another state, despite later testifying he had no knowledge about the facts alleged in his protest. Similarly, Joseph Agovino was tapped to file a protest in a separate county asserting that Joseph Golden voted twice. Bouvier, the Niehans, and Golden filed an action for libel against Porter, the defense fund, HVJT and its lawyers. On cross-motions for summary judgment, Guilford County Superior Court Judge Allen Baddour granted the plaintiffs’ motion and denied the defendants’ affirmative defense of absolute privilege. Porter, the law firm defendants, and the fund appealed. They argued that their statements were made in the course

of election protests, which were quasi-judicial proceedings to which the absolute privilege was applicable. Judge Toby Hampson, writing for a unanimous Court of Appeals panel in an Oct. 5 opinion, agreed with respect to Porter, who actually filed the protest, but affirmed denial of the protection of absolute privilege for the defense fund and the law firm defendants.

A police department’s failure to follow its own policies in not giving an officer enough time to prepare for a disciplinary hearing that led to his termination was a violation of the North Carolina Constitution’s guarantee of a fundamental right to “life, liberty, the enjoyment of the fruits of their own labor, and the pursuit of happiness,” the North Carolina Court of Appeals has ruled. The unanimous Oct. 5 opinion reverses a trial court’s ruling dismissing the officer’s claims against the department. Michael Mole’, then a sergeant with the Durham Police Department, was dispatched to an apartment in 2016 to negotiate with Julius Smoot, an armed man who’d barricaded himself in a bedroom and threatened to kill himself after police officers attempted to serve him with a warrant. Mole’, the only hostage negotiator on duty at the time, had undergone about a week’s worth of negotiation training two years earlier, but had never negotiated a barricaded subject or hostage situation. After Smoot’s gun “accidentally discharged,” Mole’ spent two hours attempting to talk him down. During the negotiation, Smoot said that he was going to smoke a “blunt.” Mole’, concerned about an armed, emotion-

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S e e ‘ Fr u i t s o f l a b o r ’ P a g e 5 ►

Prior record level nixed for failure to show work ■ BY HEATH HAMACHER hhamacher@nclawyersweekly.com Math teachers find themselves incessantly reminding students that “this is why you need to show your work.” The North Carolina Court of Appeals recently found itself in much the same position in remanding a case so that the trial court can recheck its math and ordering a new sentencing hearing because it couldn’t reasonably determine whether the lower court properly calculated a defendant’s felony convictions in determining his prior record level. James Bunting was found guilty of several drug offenses in New Hanover County Superior Court and pleaded guilty to being a habitual felon. On appeal, he argued that the trial court erred by sentencing him as a Level IV offender under North Carolina’s the Structured Sentencing Act because it was

unclear which convictions were used to calculate his record level. In its Oct. 5 decision, the appeals court said that there were more questions than answers in the trial court’s calculation. “After careful review, we remand for a new sentencing hearing because the terms of the stipulation fail to definitively identify which convictions the trial court used to calculate Defendant’s prior record level,” Judge Jeff Carpenter wrote for the court. After being convicted of three felony drug charges in January 2020, Bunting pleaded guilty to habitual felon status and stipulated to a prior record level worksheet listing 18 convictions, 10 of which were assigned prior record level points: Three outof-state convictions, two North Carolina felony convictions, two misdemeanor convictions, and three felony convictions that the state used to establish Bunting’s status as a habitual felon.

As a Level IV offender, he was sentenced to 80 to 108 months in prison. The state crossed out all but one of the out-of-state convictions, the opinion noted. Assuming that the remaining out-of-state conviction was for a crime that would be a felony under North Carolina law—the lower court didn’t make this determination, but is required to—the eight remaining convictions would total 15 points. A range of 10-13 points constitutes a Level IV offender for sentencing purposes. On a record level worksheet, the state initially assigned 14 points to Bunting’s five North Carolina felonies (each Class H or I felony counts as two points) before “inexplicably” crossing them out by hand and reducing them to 10 points, according to the opinion. The point total reached 12 when the state assigned one point for each See Prior record Page 7 ►

INSIDE LAW

VERDICTS & SETTLEMENTS

VERDICTS & SETTLEMENTS

Ethics opinion would set rules for departed lawyers’ email accounts

Student hit by tractor-trailer settles suit for $750K

Driving examiner to receive $300K after crash during test

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N O R T H C A R O L I N A L A W Y E R S W E E K LY I O c t obe r 25, 2021

LAWYERS IN THE NEWS Baker Donelson, a regional law firm, announced that it has opened its first office in North Carolina and that six attorneys have joined its new office, which is in Durham. Matthew W. Wolfe and Kenneth L. Burgess join the firm as shareholders. Matt Fisher and Iain Stauffer join as of counsel. Mysty Blagg and E. Bahati Mutisya join as associates. All six attorneys join the firm’s health law group. Nexsen Pruet announced that Austin King, Amy Mull, and Matthew Stabler have joined the firm in its Raleigh office and Wil Magaha has joined the firm in its Charlotte office. King focuses his practice on business and commercial litigation. Mull focuses on real estate and environmental law. Stabler focuses on corporate and tax law. Magaha focuses on bankruptcy and financial services. Holly Loftis, Eric Worthington, and Mark Nesdill have joined Haynes and Boone as part of the firm’s finance practice group its Charlotte office. Loftis joins as partner and advises financial institutions in structuring, negotiating, and documenting syndicated and bilateral subscription credit facilities. Worthington joins as an associate and advises clients in a variety of lending transactions, with a focus on fund finance. Nesdill also joins as an associate and focuses on fund finance and represents banks and financial institutions. The North Carolina Court of Appeals announced that it has named Jonathan Harris as its general counsel, effective Oct. 7. Harris was previously chief of staff for the North Carolina Community Colleges System Office. Nicholle Allen-Steele has joined K&L Gates as a partner in the firm’s finance practice in its Raleigh office.

Allen-Steele focuses her practice on real estate finance and development matters and comes to the firm from Parker Poe. Emily D. Mattern and Sydney C. Plummer have joined Young Moore in Raleigh as associates. Mattern focuses her practice on estate planning and administration, asset protection, and business transactions. Plummer focuses her practice on civil litigation, insurance law, and insurance regulatory matters. RaShawnda Murphy and Pete Colbert have joined Cranfill Sumner as associate attorneys. Murphy will be based in the firm’s Raleigh office, and Colbert will be based in its Charlotte office. Murphy practices in the firm’s civil litigation section with a focus on education and employment law matters. Colbert practices in the firm’s civil litigation section. Maya Weinstein has joined Tharrington Smith in Raleigh as an associate in the firm’s education section. Weinstein is a 2002 graduate of the University of North Carolina School of Law and previously clerked for North Carolina Supreme Court Justice Mark Davis. Samantha C. Jackson has joined Block, Crouch, Keeter, Behm & Sayed in Wilmington as an associate. Jackson focuses her practice on family law matters, including cases involving divorce, child custody, child support, spousal support, equitable distribution, and domestic violence. Asheville-based law firm Strauss Attorneys, PLLC has announced the opening of its Raleigh office. This will be the fourth location. Strauss currently has offices in Asheville, Hendersonville, and Landrum, South Carolina, with a primary focus on estate planning.

NEWS BRIEFS COA: Judge erred mentioning race, faith to possible jurors RALEIGH (AP) — A Black judge went too far discouraging Black residents from avoiding jury duty when one of them cited religion as a reason he should be excused from serving in a trial, a divided North Carolina Court of Appeals has ruled. A majority on the three-judge panel ordered a new trial for Allen Anthony Campbell, who was convicted in Guilford County in 2019 of several motor vehicle violations and pleaded guilty to being a habitual felon. He was sentenced to roughly seven to 10 years in prison. Superior Court Judge Lora Cubbage’s comments during jury selection “improperly injected race and religion,” violating Campbell’s right to a trial before an impartial jury, Court of Appeals Chief Judge Donna Stroud wrote in the majority’s Oct. 19 opinion. According to court documents, Cubbage questioned a potential juror who said he would be unable to function as a juror because of his religion. The juror said he was “nondenominational. A Baptist.” Cubbage excused him, then told other potential jurors, mentioning African Americans in particular: “Every day we are in the newspaper stating we don’t get fairness in the judicial system. … But none of us — most African Americans do not want to serve on a jury. And 90% of the

time, it’s an African American defendant. “So we walk off these juries and we leave open the opportunity for — for juries to exist with no African American sitting on them, to give an African American defendant a fair trial. So we cannot keep complaining if we’re going to be part of the problem,” Cubbage added, saying she grew up Baptist. “There’s nothing about a Baptist background that says we can’t listen to the evidence and decide whether” Campbell was treated and charged properly, she said. Campbell, who is also Black, did not formally object to the judge’s comments. But his attorney said they were still ripe for scrutiny because state law prevents judges from expressing “any opinion in the presence of the jury on any question of fact to be decided by the jury.” Stroud agreed and wrote that the comments resulted in “structural error.” She noted that lawyers for the state, representing prosecutors, also said that Campbell was entitled to a new trial. While Cubbage’s comments appear to reflect her desire for Campbell to have “a fair trial by virtue of a representative jury,” Stroud wrote, “courts have cautioned that irrelevant references to religion, race and other immutable characteristics can impede a defendant’s right to equal protection and due process.” Judge John Tyson agreed with See Page 5 ►

BAR DISCIPLINE

ROUNDUP Attorney: Lonnie P. Merritt Location: Wilmington Bar membership: Member since 2008 Disciplinary action: Suspended from the practice of law for one year on Sept. 21 Background: Merritt represented a client in a domestic matter. During the representation, Merritt began a romantic relationship with the client that included sexual conduct. Merritt continued to represent the client until her divorce was finalized. Previous discipline: None Attorney: Mark A. Key Location: Lillington Bar membership: Member since 1997 Disciplinary action: Censured on Aug. 25 Background: Beginning in 2017, Key represented an estate in a personal injury matter and the administration of the estate. Key failed to timely file the required accounting of the estate and failed to reasonably consult with the estate’s fiduciary or promptly comply with her reasonable requests for information. Separately, Key represented a client who was seeking post-conviction relief. Key failed to represent the client with required diligence and promptness, failed to communicate with the client about the means by which her objectives would be accomplished, and failed to keep her reasonably informed about the status of her probation matter. Previous discipline: Key was suspended from the practice of law for two years in May 2003, with the suspension being stayed for three years so long as Key complied with certain conditions. In June 2006, the stay of the suspension was lifted, and Key was suspended for 90 days for failure to comply with a material condition of the order of discipline. After the order was affirmed by the Court of Appeals, Key began serving the suspension in February 2008 and was reinstated in May 2008. Attorney: Larry G. Hoyle Location: Gastonia Bar membership: Member since 1990 Disciplinary action: Reprimanded on Aug. 25 Background: In April 2015, a client hired Hoyle to file a motion for contempt against his wife in a child custody case. In June 2020 the wife contacted Hoyle about representing her in a juvenile case, and Hoyle represented the wife at an October 2020 hearing in which the court decided that the child should be returned to the wife’s custody. The Grievance Committee found that Hoyle had a conflict of interest in his representation of the wife, as the two matters were substantially related as they both raised questions of the parents’ fitness to have custody of the child. Previous discipline: Hoyle was censured in Januar y 2019 af ter making false statements in a written designation for secured leave and filing a motion on behalf of a

criminal defendant when he had no legal authority to act on behalf of that d e f e n dant . H e w as als o censured in Februar y 2009 for engaging in improper ex parte communications and making a misrepresentation to the court about the other party’s consent to the matter before the court, and admonished in 2003 for failing to respond to a request for information from the state bar. Attorney: Peter R. Henry Location: Arden Bar membership: Member since 1996 Disciplinary action: Reprimanded on Aug. 25 Bac kground: H enr y f aile d to properly respond to a discovery request on behalf of a client, leading to a summary judgment motion being granted in favor of the opposing party. In response to a grievance filed in the matter, Henry made misleading assertions and failed to provide a full and fair disclosure of the facts. Previous discipline: Henry was suspended from the practice of law for three years in November 2016 for failing to keep clients adequately informed and making inaccurate and misleading statements. That suspension was stayed. Attorney: Wesley S. White Location: Charlotte Bar membership: Member since 2012 Disciplinary action: The remaining portion of White’s suspension was stayed on Oct 5. Background: White was suspended from the practice of law for two years on May 11, provided that after three months he could apply for a s t ay of the remainder of the suspension. White had failed to adequately explain to a client his obligation to respond to discovery, failed to make a reasonably diligent inquir y of his client regarding information responsive to discovery, and failed to appear on his client’s behalf at a hearing on a m o ti o n to co m p e l . Af te r th e opposing par t y was granted attorneys’ fees as a sanction, White failed to timely file the record or pay the bond on appeal of those sanctions. He did not tell his client about this failure or that the appeal was dismissed, or take action to have his client comply with the sanctions order after it was upheld. White failed to appear on his client’s behalf at a contempt hearing or explain that his client could be incarcerated if the court held him in contempt. White filed a petition for a stay of the suspension, and the Disciplinary Hearing Commission found that all the requirements for a stay had been satisfied. Previous discipline: None All information contained in the Bar Discipline Roundup is compiled and edited by Lawyers Weekly editor-inchief David Donovan. He can be reached at david.donovan@ nclawyersweekly.com.

N O R T H C A R O L I N A L A W Y E R S W E E K LY I Octo ber 25, 2021

Ethics opinion would set rules for departed lawyers’ email accounts ■  BY DAVID DONOVAN david.donovan@nclawyersweekly.com Law firms need to keep a departing lawyer’s email account active and monitor and respond to incoming emails for a reasonable period of time, a newly proposed ethics opinion would rule. Proposed 2021 Formal Ethics Opinion 6, “Departing Lawyer’s Email Account,” published by the North Carolina State Bar Council’s ethics committee at its most recent meeting on Oct. 7, would require law firms to place an outgoing auto-reply message of their choosing on any departing lawyer’s email account. The response must include notice of the lawyer’s departure and, if appropriate, provide new contact information for the departing lawyer if the has law firm has any. What constitutes a reasonable length of time to monitor incoming emails will vary depending on factors such as the type of law practiced by the law firm and the caseload the departing lawyer maintained while at the firm, but in general, a firm must keep a departing lawyer’s email account active for a three-month period

unless there are circumstances that would make it reasonably necessary to shorten or extend that period, the opinion states. “In the absence of special circumstances, Law Firm must not keep Departing Lawyer’s email account active after three months. Law Firm must deactivate Departing Lawyer’s email account to avoid giving clients and other third parties the impression that Departing Lawyer remains associated with Law Firm and to prevent clients and other third parties from inadvertently disclosing information to unanticipated recipients.” The committee also published a revised version of an opinion that was returned to a subcommittee after an initial round of publication earlier this year. Proposed 2021 Formal Ethics Opinion 3, “Charging Fees to Separately Represented Party in Residential Real Estate Closing,” would rule that a closing lawyer representing the buyer in a residential real estate transaction may not charge a fee for services performed that primarily benefit the buyer to a separately represented seller unless the seller consents to the fee and the lawyer complies with Rules 1.5(a) and

1.8(f). It also allows a closing lawyer to charge a seller for services performed that primarily benefit the seller if seller is notified in advance of the charge and has a reasonable opportunity to object to the charge. Six inquiries were sent or returned to subcommittee for further study, including inquiries addressing the confidentiality of information contained in the public record, the ethical considerations surrounding a lawyer’s participation in an online advertising platform such as Google’s Local Service Ads, and a lawyer’s professional responsibility in providing limited representation to an indigent client in a criminal matter. The committee also received reports from two subcommittees that are studying potential amendments to the Rules of Professional Conduct. One is studying the potential inclusion of anti-discrimination language in the rules, and the other is studying potential amendments to Rule 1.19, which prohibits sexual relations with clients. Both subcommittees will continue their work over the next quarter. Additionally, the State Bar Council, following favorable votes from both the ethics committee and the execu-

NEWS / 3

tive committee, published on Oct. 8 a revised proposed comment to Rule 1.1 (Competency), which states that a lawyer’s competency is enhanced by awareness of implicit bias and cultural differences relative to a client that might impact the lawyer’s representation of the client. Proposed Comment [9], which is aspirational, would state that “A lawyer should be aware of implicit bias and cultural differences relative to a client or anyone involved in a client’s matter that might affect the lawyer’s representation of the client. Such awareness enhances a lawyer’s competency and works to ensure understanding of the client’s needs, effective communication with the client and others, and adequate representation of the client.” Both proposed opinions and the proposed comment to Rule 1.1 will be published for comment via the State Bar Journal and the bar’s website, and the ethics committee welcomes comments from attorneys on any of the proposals. Comments may be submitted by email to ethicscomments@ ncbar.gov and are requested by Dec. 31. Follow David Donovan on Twitter @NCLWDonovan

Student hit by tractor-trailer settles suit for $750K ■  BY DAVID BAUGHER A high school senior whose car was T-boned by a tractor trailer whose driver had failed to yield to him has reached a $750,000 settlement, his attorney reports. Justin Hunter of Hunter & Price in Wallace reports that his client suffered a grade 3 spleen laceration and multiple fractured ribs as a result of the 2018 crash. The names of the parties in the case were withheld pursuant to a confidentiality agreement. Hunter said that the young Justin Hunter man spent 12 days in intensive care after the crash, which occurred at a rural Duplin County intersection. “The big thing was what, if any, future pain and suffering was he going to have and what, if any, future medical treatment was he going to have to

have?” Hunter said. “You’ve got a trucking company with a lot of money at stake, and you’ve got a young plaintiff with his whole life in front of him, and you are dealing with a whole lot of unknowns.” Hunter said that, despite admitted liability, the matter turned out to be a “dogfight.” “From their perspective, it was a damages-only case,” Hunter said. “They were going to hang their hat on just the nature of the injuries and the uncertainty of what, if anything, he was going to have to have.” Hunter said his client didn’t qualify for publicly subsidized insurance and couldn’t afford private coverage. He noted that the policy limit on the case was $1 million. He said that the highest offer in the matter, prior to his involvement, had been $300,000. “He resisted the pressure to take it,” Hunter said of his client. He called the young motorist a humble and hardworking honors student who he believes would have been well received by a jury. “He presented incredibly well,” Hunter said. “I could not have asked for a better client.”

SETTLEMENT REPORT – MOTOR VEHICLE CRASH

Amount: $750,000 Injuries alleged: Grade 3 spleen laceration; closed fracture of multiple rubs on the left side, some of which were segmental and displaced; traumatic pneumothorax and hemothorax on the left Case name: Withheld Court: Duplin County Case No.: Withheld Date of settlement: July 22 Special damages: $147,125.11 Insurance carrier: Integon Indemnity Corporation Attorney for plaintiff: Justin Hunter of Hunter & Price in Wallace Attorneys for defendants: Withheld

Driving examiner to receive $300K after crash during test ■  BY DAVID BAUGHER

VERDICT & SETTLEMENT REPORT – MOTOR VEHICLE WRECK

A driver’s examiner who was injured by an applicant who had an accident while trying to obtain his driver’s license will take home more than $300,000 in a post-trial settlement, his attorneys report. F. Davis Poisson III and Fred D. Poisson Jr. of Poisson Poisson & Bower in Wadesboro report that their client, Jamie Hughes, a Stanly County resident and 52-year-old Navy veteran, sued Nicholas F. Davis Steven McGinty after McGinty struck a curb during his driving test. The vehicle’s Poisson III owner, a construction company where McGinty intended to use his license for work, was also named in the suit. The insurer, Nationwide, didn’t deny that the defendants were negligent in the 2016 incident, but claimed that Hughes had suffered no injury. Instead, they linked his back trouble to preexisting deFred D. Poisson Jr.

See Crash Page 7 ►

Amount: $326,000 verdict, modified to a $307,500 post-trial settlement Injuries alleged: Cervical spine injury and aggravation of pre-existing degeneration Case name: Jamie W. Hughes v. McGinty Construction, Inc., McGinty Building Contractors, Inc. and Nicholas Steven McGinty Court: Stanly County Superior Court Case No.: 19 CVS 382 Judge: Kevin Bridges Date of verdict: July 2 Demand: $397,000 at trial Highest offer: $12,500 Special damages: $46,000 in medical expenses, $83,601.98 in past lost wages, $167,994.45 in future lost wages Most helpful experts: Steve Farlow of Raleigh (accident reconstruction) and E. Hunter Dyer of Charlotte (neurosurgeon) Insurance carrier: Nationwide Attorneys for plaintiff: F. Davis Poisson III and Fred D. Poisson Jr. of Poisson Poisson & Bower in Wadesboro Attorneys for defendants: William Robinson of Robinson, Elliott & Smith in Charlotte

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N O R T H C A R O L I N A L A W Y E R S W E E K LY I O c t obe r 25, 2021

New Appellate Rules amendments: Mandatory e-filing, records on appeal, and motions ... oh my! ■  BY BETH SCHERER A version of this story originally appeared on Fox Rothschild’s North Carolina Appellate Practice Blog. On Oct. 13 the North Carolina Supreme Court issued new amendments to the North Carolina Rules of Appellate Procedure. Here are the key changes, which apply to notices of appeal filed on or after Jan. 1, 2022.

Electronic appellate e-filing mandatory for counsel in all appeals

Mandatory e-filing. Remember approximately 18 months ago when paper-filing of the printed record was mandatory in the Court of Appeals— and then the pandemic shook up the prohibition on e-filing? The great e-filing experiment appears to have been a success. In the new year, electronic filing in the appellate courts will be mandatory for counsel and encouraged for pro se litigants in all appeals. N.C. R. App. P. 26(a). This requirement includes all components of the record on appeal. Note that the new rule contains an exception for technical failures, as well as exceptions for oversized and non-documentary exhibits for which e-filing is often impossible. Filing defined. The amendments clarify that items are considered “filed” when received by the electronic filing website. This clarification makes sense. During the early days of the pandemic, it could take days before the clerk’s offices sent their emails accepting or approving electronically filed materials. The new rule expressly ties filing to when the materials are successfully received on the website.

Original versus copies of exhibits and other Rule 9(d) items

I still fondly recall John Connell’s stories about dog food and other weird exhibits sitting in the Court of Appeals’ basement. And rumor has it that Dan Horne’s office contained a collection of assault weapons that was very effective at discouraging questions after 4:30 p.m. So why have the appellate courts become a repository for food, guns, and illegal drugs? For one, practitioners often fear that not submitting everything to the appellate courts could lead to a malpractice claim. Numerous appellate opinions have rejected insufficiency of the evidence arguments based on counsel’s failure to include all exhibits in the appellate record. Second, the appellate clerks sometimes find it difficult to discern which exhibits are originals as opposed to copies—erring on the side of caution by keeping many exhibits indefinitely. In short, the proliferation of papers and wacky items has become an administrative (and financial storage) nightmare for the appellate courts. A completely rewritten Appellate Rule 9(d)(2) has several features that should significantly curtail the above problems. Copies preferred. Parties are encouraged to file copies of exhibits and other items, rather than originals. N.C. R. App. P. 9(d). Indeed, the imposition of mandatory e-filing should eliminate most of the original items concerns because the electronically-filed items are not originals anyway.

Original items described and incorporated by reference. For original materials that cannot be readily copied, parties should include a brief description of the item in the printed record. N.C. R. App. P. 9(a)(1) (p), 9(a)(2)(m), 9(a)(3)(o). This type of record-based description permits original items to be incorporated into the record on appeal by reference— i.e., without the item having to be physically delivered to the appellate courts. See N.C. R. App. P. 9(d)(2) (“Original exhibits and other original items that have been settled as part of the record on appeal may be relied on by the parties in their briefs and arguments…”). Originals delivered only with permission. But what if a party believes that it is critical for the appellate judges to physically see, touch, or smell that 15-lb. bag of Alpo that smells like fine, French perfume? Original exhibits can still be delivered to the appellate court—but only with the appellate court’s permission. N.C. R. App. P. 9(d)(2). A motion under this new rule must explain the original exhibit’s relevance—and then wait for the appellate court to decide if it really, really needs to see the original. N.C. R. App. P. 9(d)(2)(a). If the motion is allowed, the custodian of the original exhibit must promptly deliver the exhibit to the appellate clerk “in a manner that ensures its security and availability for use in further trial proceedings.” N.C. R. App. P. 9(d)(2)(a). Originals delivered upon request. What if the appellate court decides that it needs an original exhibit to decide the case, but no motion was filed or the motion was originally denied? The appellate court can require that the original be delivered to the court at any time. N.C. R. App. P. 9(d)(2)(a). Originals returned or destroyed. When an appeal ends, the appellate clerk will ask the prior custodian to retrieve the original exhibit. N.C. R. App. P. 9(d)(2)(b). If the custodian ignores the notice, the appellate clerk may dispose of it. (Note: Various statutes require that criminal exhibits be preserved for post-conviction purposes. I suspect the appellate clerks will not be eager to trash these materials—even if a trial court clerk disregards a pick-up notice. But we shall see.) Required notice on Rule 9(d) copies. All Rule 9(d)(1) “copies” must include this notice on the front page: “Rule 9(d) Copies of Exhibits and Other Items.” Given that e-filing is now mandatory, I think this rule is for when copies are printed by someone within the court, or when a party submits a copy of an oversized exhibit (for example, an oversized plat). The mandatory notice will help the appellate clerks ascertain whether Rule 9(d) materials can be thrown away because either (1) the material is already stored within the electronic filing system, or (2) the oversized exhibit is only a copy.

Expanded definition of Rule 9(d) Documentary “Exhibits”

Sometimes an appellate provision morphs into a practice that goes beyond what a rule’s text originally contemplated. The modern incarnation of Rule 9(d) Documentary Exhibits is one such practice. When adopted back in 1975, Appellate Rule 9(d) addressed how trial exhibits were submitted

outside of the printed record on appeal. Over time, however, so-called “Rule 9(d) Documentary Exhibits” became a repository for trial tribunal items that did not logically fit or need to be included in the printed record, but which were too important to leave out of the appellate record altogether. For example, appellate counsel might be concerned that the opposing party will take the position that an issue was not properly preserved below, or a party might seek to avoid a key concession made in a trial court brief. Including the relevant items in a Rule 9(d) Documentary Exhibit labeled “Trial Court Memoranda and Briefs” is one way to include the materials in the appellate record without bloating the printed record. Rule 9(d) Documentary Exhibits sometimes also provide a way of promoting a better-organized appellate record. See generally Scherer & Leerberg, North Carolina Appellate Practice & Procedure § 7.04 [Determining in Which Components of the Record on Appeal Documents Should Be Submitted]; § 7.08 [Rule 9(d) Documentary Exhibits]. The problem with old Appellate Rule 9(d)’s text is that it spoke in terms only of exhibits. See N.C. R. App. P. 9(d) (2020). Expansion of permissible Appellate Rule 9(d) materials. Rewritten Appellate Rule 9(d) incorporates the modern practices by providing that all “exhibits and other items that have been filed, served, submitted for consideration, admitted, or made the subject of an offer of proof may be included in the record on appeal under [Rule 9(d)] if a party believes that they are necessary to understand an issue on appeal.” Such items may be grouped together and presented to the appellate court in one or more separate Rule 9(d) volumes—or they may be included in the printed record. N.C. R. App. P. 9(d)(1). Statement of Rule 9(d). By custom, a “Statement of Rule 9(d)” has long been included in printed records when materials are submitted under Rule 9(d). See Scherer & Leerberg § 7.07[2] [q] [Statements Describing Supplements to and Additional Components to Printed Record]. This statement is now required whenever copies of Rule 9(d) items are filed with the printed record. N.C. R. App. P. 9(a)(1)(o), 9(a) (2)(l), 9(a)(3)(n).

Printed record versus record on appeal

The meaning of the phrase “record on appeal” has undergone a gradual, but substantial, metamorphosis over the past 45 years—both within the case law and within the text of the appellate rules. In the old rules, the phrase “record on appeal” sometimes referred to the golden-rod yellow “print record” reproduced by the clerk’s office in every appeal. But at other times, the phrase “record on appeal” was used to refer more broadly to the entire appellate record. Needless to say, figuring out which “record on appeal” the appellate rules were referencing could be difficult. “Record on Appeal” defined. The amended rules clear up confusion by defining “record on appeal” broadly to include the “printed record, transcripts, exhibits and other items included in the record

"Helping lawyers practice better, more efficiently, and more profitably." ■  PUBLISHER Liz Irwin lirwin@bridgetowermedia.com ■  EXECUTIVE EDITOR Andy Owens aowens@scbiznews.com ■  EDITOR IN CHIEF David Donovan david.donovan@nclawyersweekly.com ■  EDITORIAL Heath Hamacher, Reporter hhamacher@nclawyersweekly.com Scott Baughman, Digital Media Manager sbaughman@mecktimes.com ■  ADVERTISING Sheila Batie-Jones, Advertising Account Executive sheila.batie-jones@nclawyersweekly.com ■  ACCOUNTING & ADMINISTRATIVE Michael McArthur, Business Manager mmcarthur@bridgetowermedia.com ■  CIRCULATION Disa Ehrler, Audience Development Manager dehrler@bridgetowermedia.com Circulation: 1-877-615-9536 service@bridgetowermedia.com ■  PRODUCTION & OPERATIONS Jason Reckamp, Designer jreckamp@molawyersmedia.com ©2021 BridgeTower Media. Material published in North Carolina Lawyers Weekly is compiled at substantial expense and is for the sole and exclusive use of purchasers and subscribers. The material may not be republished, resold, recorded, or used in any manner, in whole or in part, without the publisher’s explicit consent. Any infringement will be subject to legal redress. Subscriptions: $410.36 per year Established 1988 Statewide General Circulation 919-829-9333 • 1-800-876-5297 Charlotte office: 130 North McDowell Street, Unit B, Charlotte, NC 28204 704-377-6221 • 704-377-4258 fax: 1-800-8765297 www.nclawyersweekly.com For subscription questions 1-877-615-9536 service@bridgetowermedia.com North Carolina Lawyers Weekly [ISSN10411747] [USPS 002-904] is published weekly each month except April through September, when it is printed bi-weekly for $410.36 per year by North Carolina Lawyers Weekly, 130 North McDowell Street, Unit B, Charlotte, NC 28204 Periodicals postage paid at Charlotte, North Carolina 28228-9998. Postmaster: Electronic ACS Service Requested. Send address changes to: North Carolina Lawyers Weekly, Subscription Services, P.O. Box 1051, Williamsport, PA, 17703-9940 North Carolina Lawyers Weekly is a publication of BridgeTower Media, 222 South Ninth

See Amendments Page 7 ►

Street, Suite 900, Minneapolis, MN 55402.

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N O R T H C A R O L I N A L A W Y E R S W E E K LY I Octo ber 25, 2021

‘FRUITS OF LABOR’ / C o nt inu e d f r o m 1 ►

al, and potentially impaired man, made Smoot a straightforward offer: if Smoot disarmed himself and surrendered, he could light up his joint. Smoot dropped his gun, handcuffed himself, and pulled the blunt from behind his ear. Mole’ kept his word. Several months later, the city ordered Mole’ to attend a pre-disciplinary hearing the following day, although its written policy requires a three-day notice. One of Mole’s attorneys said that at the hearing it was determined that Mole’ had aided in the commission of a crime. After Mole’ was terminated, he sued the city, alleging that it violated his state constitutional rights to due process, equal protection, and the fruits of his labor. Durham County Superior Court Judge John M. Dunlow granted the city’s motion to dismiss each of the claims. The “fruits of their own labor” clause—added to the state constitution in 1868 when former slaves became able to work for their own benefit—is not included in the U.S. Constitution. Until recently, the clause has been used only to strike down unreasonable licensing restrictions, but it has been extended to include other state actions that interfere with the right to earn a livelihood. In 2018, the state’s Supreme Court held in Tully v. City of Wilmington that a police department violated an officer’s right to enjoy the fruits of his own labor by failing to follow its written promotion procedures by refusing the officer’s appeal of the test results despite a provision that any portion of the selection process could be appealed at any time. Tully guarantees the right to pursue one’s profession free from unreasonable government action and established three requirements to plead the claim: Proof of a clear, established policy regarding the employment promotional process that furthered a legitimate governmental interest; proof that the employer violated the policy; and proof that the plaintiff was injured by the violation. Here, the first question before the appeals court was whether Tully limits the claim to the promotional process. Judge Lucy Inman, writing for the court, said that while a strict reading of the case might imply so, Tully “detailed the underlying constitutional injury in terms broader than the promotional process,’ it would employ logic that it “applies with equal force” to Mole’s firing. “It is undeniable that unreasonable employee discipline—including termination—by a government employer implicates this same right and raises the same concerns,” Inman wrote. “Sergeant Mole’s allegation that he was given improper and inadequate notice of his pre-disciplinary hearing does fall within Article I, Section I’s protections.” The court found that the inadequate notice violated the city’s own disciplinary procedures, which were designed to further a legitimate government interest by ensuring that its employees are treated fairly in the administration of discipline.

Mole’ satisfied the final Tully element by alleging that his response would have been more comprehensive with reasonable notice of the hearing. The judges acknowledged the state’s at-will employment policy and didn’t find that Durham couldn’t terminate Mole’ because of his conduct or without cause, but said that the city was bound to follow its own disciplinary procedures. “If the evidence shows that Durham failed to do so and that Sergeant Mole’ was harmed by that failure, Article I, Section 1 of our Constitution provides a remedy,” Inman wrote. The court did affirm the dismissal of Mole’s due process and equal protection claims, finding that employees don’t have a property interest in continued employment and that the U.S. Supreme Court has held that class-of-one claims cannot be stated in the employment context. It noted, however, that while the 14th Amendment doesn’t provide a remedy for Mole’s due process and equal protection claims, the North Carolina Constitution could. “But the final arbiter of the North Carolina Constitution is the North Carolina Supreme Court,” Inman wrote. “Because our constitution is to be liberally construed, we urge the Supreme Court to address this issue.” Judges Valerie Zachary and Jeff Carpenter concurred in the ruling. J. Michael McGuinness of the McGuinness Law Firm in Elizabethtown and Travis Payne of Edelstein & Payne in Raleigh represented Mole’. Payne said that Mole’ was failed on multiple levels by a department that was supposed to provide regular training with the hostage team and dispatch a special enforcement team in a support role. “He had an excellent record … this is a travesty,” Payne said. “This fine officer was trained minimally ... in hostage negation. Here’s this officer who’s never negotiated a hostage situation before, in an incredibly tense situation, he knows the guy is threatening suicide and has a gun, and they fired him when he successfully ended that situation with no one getting hurt.” Payne also contended that Mole’ never actually aided in the commission of a crime. Although the point hasn’t been resolved by the courts yet, smoking marijuana isn’t a crime—possessing it is. “That’s a point we will certainly emphasize, and I’m sure that the city will be raising hell that we can’t, but it is significant and certainly could’ve been one of the things that Sgt. Mole’ could’ve pointed out if he’d had time to prepare,” Payne said. “The details of what he could’ve done with an additional 48 hours of prep time will be the primary topic for litigation as the case proceeds.” Henry Sappenfield and Michele Livingstone of Kennon Craver in Durham represented the city of Durham. Neither attorney returned a request for comment. The 26-page decision is Mole’ v. City of Durham (Lawyers Weekly No. 011-199-21). The full text of the opinion is available online at nclawyersweekly.com. Follow Heath Hamacher on Twitter @NCLWHamacher

C o nt inu e d f r o m 2 ►

Stroud. The other panelist, Judge Chris Dillon, said that although some of Cubbage’s words were inappropriate, they weren’t designed to suggest that Campbell was guilty or to coerce jurors to answer dishonestly. “Rather, she was admonishing just the opposite — for the jurors to be honest about whether their objection to sitting on the jury was truly based on a religious reason,” Dillon wrote while stating he would let the trial result stand. The 2-1 decision means it would fall to the state Supreme Court to consider any appeal. But it’s unclear whether one will be requested since both sides in the case sought a new trial. Cubbage, a former District Court judge, was elevated to Superior Court in 2018. She ran for the Court of Appeals in 2020 but lost to Fred Gore. Both were seeking an open seat on the state’s 15-member intermediate appeals court.

New judge in Forsyth, chiefs in Onslow and Union Gov. Roy Cooper has appointed Frederick B. Adams II to serve as a district court judge in Judicial District 21, serving Forsyth County. Adams, who had been in private practice, will fill the vacant seat formerly held by Judge Lisa V. Menefee, who retired in August. Separately, Chief Justice Paul Newby has appointed District Court Judge James Moore to serve as chief district court judge for District 4, serving Onslow County, effective Nov. 1. Moore will succeed Chief District Court Judge Sarah Seaton, who will retire on Oct. 31. Newby also named District Court Judge Erin Hucks to serve as chief district court judge for District 20D, serving part of Union County. Uniquely among North Carolina’s counties, Union County has four district court districts. Hucks was appointed to the bench in 2019 to fill the vacancy created by District Court Judge William “Tripp” Helms, who now serves in a different Union County district. Staff reports

UNC may keep affirmative action in admissions, judge says RALEIGH (AP) — A federal judge has ruled that North Carolina’s flagship public university can continue to consider race as a factor in its undergraduate admissions, rebuffing a conservative group’s argument that affirmative action disadvantages white and Asian students. U.S. District Judge Loretta Biggs ruled on Oct. 18 that the University of North Carolina has shown that it has a compelling reason to pursue a diverse student body and has demonstrated that measurable benefits come from that goal. “In sum, the Court concludes that UNC has met its burden in demonstrating that it has a genuine and compelling interest in achieving the educational benefits of diversity,” Biggs wrote. Students for Fair Admissions sued UNC in 2014, arguing that using race and ethnicity as a factor in college admissions violates the Equal

Protection Clause of the U.S. Constitution and federal civil rights law. The group contended that UNC had gone too far in using race as a factor in admissions and had thus “intentionally discriminated against certain of (its) members on the basis of their race, color, or ethnicity.” The group’s president, Edward Blum, told The Associated Press in an interview that it would appeal the ruling to the 4th U.S. Circuit Court of Appeals. His group already appealed a denial in a similar lawsuit against Harvard University. Blum said he hopes both cases get bundled together so that the U.S. Supreme Court rules simultaneously on private and public universities. “Shame on Harvard, shame on UNC and shame on all universities who take federal funds from considering race as an element,” said Blum, who has long sought to rid college admissions of race-based admissions policies. The Supreme Court in June asked the Justice Department to weigh in on Blum’s Harvard lawsuit, which was supported by former President Donald Trump’s administration. Trump’s Justice Department also challenged Yale University’s admissions practices in a suit President Joe Biden’s administration dropped earlier this year. UNC countered in court that its admission practices are legally and constitutionally permissible and that race-neutral alternatives would not enable it to achieve its diversity goals. Of roughly 20,000 undergraduate UNC students this fall 2021 semester, approximately 56% are white, nearly 13% Asian, about 10% Hispanic, and 8.5% Black, the university said. “This decision makes clear the University’s holistic admissions approach is lawful,” said an emailed statement from Beth Keith, a spokesperson for the university. “We evaluate each student in a deliberate and thoughtful way, appreciating individual strengths, talents and contributions to a vibrant campus community where students from all backgrounds can excel and thrive.” Biggs wrote that she applied the U.S. Supreme Court’s University of Texas precedent, which established that schools may consider race in admissions in ways narrowly tailored to promote diversity. She noted that UNC “offered a principled and reasoned explanation,” supported by research, for its pursuit of a diverse student body, citing a 2005 report by a UNC task force that its academic goals depend on “a critical mass” of students from underrepresented groups. “The University has presented substantial evidence demonstrating its good faith in pursuing the educational benefits that flow from diversity,” Biggs concluded. The Lawyers’ Committee for Civil Rights Under Law represented a racially diverse group of students who intervened in the case demanding that the university to even more to support minorities. Its statement said considering race in admissions helps ensure that talented applicants from historically marginalized groups aren’t overlooked. “As our clients demonstrated with their trial testimony and evidence, race is an integral part of a students’ identity, and must be treated as such during the admissions process,” attorney Genevieve Bonadies-Torres said.

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N O R T H C A R O L I N A L A W Y E R S W E E K LY I O c t obe r 25, 2021

How to run a well-documented and defensible eDiscovery process ■  BY JEAN E. KORDENBROCK It is commonplace in almost every litigation matter today, but it still strikes fear in the minds of many lawyers: electronic discovery. From collecting data to protecting it in a secure environment, the federal rules require lawyers to competently gather the relevant information and defend the process used to collect it. The reasons many lawyers distress over eDiscovery are twofold: (1) the process can be complex and (2) a flawed process can lead to serious, negative consequences, including adverse rulings and sanctions. The good news is that, with greater understanding and careful planning, every litigator can handle eDiscovery. Once a lawyer learns of an imminent or actual legal claim against a client, it is critical that eDiscovery becomes an immediate area of focus. The process of determining whether the appropriate steps were taken to identify ESI in litigation is evaluated using a standard of reasonableness. The first step in the eDiscovery process involves the legal duty to preserve potentially relevant ESI. This includes the identification, preservation and collection of relevant in-

formation. The identification of ESI begins with gaining an understanding of what current information policies and procedures the client currently has in place. To the extent the client has an information technology (“IT”) department in place, meeting with the relevant IT professionals can be a good way to gain a holistic understanding of the client’s past and current information governance practices. Some of the questions that should be immediately addressed include: What are the client’s document management systems? What hardware and software applications are in use? What is the current data management strategy? How do employees save, retrieve and share documents? What backup procedures are in place? During the process of identifying ESI, it’s important to keep in mind the scope and breadth of the ways clients create, store and share information in 2021. Email, text messaging, instant message software such as Slack, chat functions in Zoom and Teams, social media applications, file servers, cloud-based applications, mobile devices...the list goes

on. While not every source of ESI will contain relevant information, it is nonetheless incumbent upon the lawyer to identify all sources in order to make that determination. Once sources are identified, a data map should be created, which is a comprehensive inventory of an organization’s data which could be potentially relevant to a legal investigation. A data map typically includes: (1) what types of data the company generates, uses, and stores; (2) where the data is stored; (3) who is in charge of the data; and (4) whether and when it should be archived or deleted. Another important aspect of creating a defensible process is determining the key people involved in events giving rise to the dispute who may be custodians of information. This requires analysis of who the custodians are, what the reporting structure is within an organization, who has access to what data, and what systems and applications custodians use. As you can see from this merely cursory review of the many steps involved in the identification, preservation and collection of ESI, there is a lot to take into account. And the risks of failing to take the appropriate action are real and significant.

At worst, lawyers can expose themselves and their clients to sanctions or adverse rulings in litigation. At best (and this is still bad), the eDiscovery process may have to be redone, leading to substantial additional costs for clients. A lawyer who is handling a case involving eDiscovery has a few different options. First, trying to go it alone, which is risky if they don’t have the requisite experience and expertise. Second, hiring an outside eDiscovery vendor, which can be helpful but still poses risks because the lawyer may have no way to evaluate the appropriateness of the process. Third, team up with another outside lawyer who specializes in eDiscovery who can help ensure that the process is defensible. Regardless of the approach, one thing is certain: in our increasingly digital and remote-working world, eDiscovery will continue to gain more significance—and become more complex—in litigation. Knowing the Rules is an important first step. Creating and running a defensible eDiscovery process requires a deeper understanding, and expertise born of experience. Jean E. Kordenbrock leads the eDiscovery practice group at Fraser Trebilcock.

How operating agreements can solve debt/equity disputes ■  BY ZANA TOMICH BridgeTower Media Newswires Private businesses often rely on infusions of cash from their owners — whether to start the business, fund its expansion or develop its next great product. The infusions can be small, such as amounts needed to get through a payroll period while awaiting a customer payment. They can also be large, such as financing for a major equipment upgrade. Financing from owners, then, can solve a lot of operations problems for a private business. But it can also create a whole bunch of other problems down the road if the right planning isn’t in place. The potential trouble arises from the fact that when owners put cash (or other value) into a privately held company, the transfer can be characterized in one of two ways: either as a loan or a capital contribution. The distinction is significant — for the business, its owners and its creditors. Given the stakes riding on it, it’s not unusual for business owners to fight, after the fact, over whether funding received from one of them was a loan or capital contribution. And in almost all cases, having a clear operating agreement would have rendered those stressful and costly legal disputes unnecessary. This article will describe why the difference between loans and capital contributions matters, how courts distinguish between them, and how a good operating agreement can forestall disputes over them.

Why it matters

Capital contributions are investments an owner makes in a busi-

ness in return for equity. A loan, on the other hand, is a debt owed by the company. The classification of financing as a loan or a capital contribution has important implications. For starters, it dictates how repayment is treated for tax purposes for the owner. If it’s a loan, the repayment is tax free. If it’s a capital contribution, the repayment may have to be treated as a taxable dividend. The classification also affects whether the business must make interest payments on the money it received — and whether it can deduct those payments from its taxes. If it’s a loan, it can deduct the interest payments; if it’s a capital contribution, no interest payments would be required (nor could they be deducted). The distinction between loans and capital contributions can also hold great importance if the business is forced into bankruptcy, where loans are entitled to a higher priority than equity. Given the stakes, disputes often break out among owners over the classification an owner contribution. The disagreements often arise after the fact, and very often occur when a business relationship sours (as many unfortunately do). There have been innumerable instances of owners squabbling over the critical distinction between loans and capital contributions. Related issues also arise frequently, like whether one owner’s “sweat equity” was the equivalent of another’s cash transfer or whether an operating agreement obligated one owner to make a contribution but not another. Ultimately, in the absence of a clear operating agreement, the courts are

left to determine whether an owner’s transfer to a business should be considered a loan or capital contribution.

How courts decide

To help themselves work through frequent questions over the distinction between debt (loans) and equity (capital contributions), courts have developed their own analytical frameworks. One common approach was established by the 6th U.S. Court of Appeals. The “Roth Steel Factors,” as the 6th Circuit’s test is known, look beyond the intent of the parties and require an analysis of a series of factors such as (but not limited to) names given to the instruments, if any, that evidence indebtedness; the presence or absence of a fixed rate of interest and interest payments; the source of repayment; and the adequacy or inadequacy of capitalization. An example of how these factintensive issues play out in the real world is described in a case between two business partners in New York — Gary Duff and Peter Curto — who were each 50% members in an LLC. After their business failed, Duff initiated a lawsuit against Curto, alleging that he (Duff) made more than $500,000 in capital contributions to the business and Curto made none. Duff asserted claims for breach of contract and unjust enrichment. The LLC’s operating agreement provided that “each Member shall contribute cash and/or property to the Company as set forth opposite their names in Exhibit A” to the agreement. Unfortunately for Duff, the spaces on exhibit A for the owners’ “initial cash contribution” had been left blank. Accordingly, the court found that the operating agreement was ambiguous

as to whether an initial cash contribution was required by both parties. Because of that ambiguity, and the fact that Duff reported a recourse loan to the LLC on his tax return, the court ruled in favor of Curto on summary judgment. If the LLC’s operating agreement had been clearer on the cash contribution required from each of the partners, the dispute between Duff and Curto likely would never have reached the court. It’s a recurring theme in disputes between owners over the debt-equity distinction

The solution: A clear operating agreement

To avoid disputes between owners from the start, an operating agreement should address issues such as how ownership interests are allocated, the amount and manner in which initial and additional capital contributions will be made, and how unexpected events which may impact ownership interests (or the very existence of the business), such as death, withdrawal from the business, bankruptcy or failure to make capital contributions, will be handled. Without clear terms covering these issues, courts may well be forced to decide the outcome in the event of a dispute. That’s not a position they want to be in, and the extended court battles that precedes their decisions often leave both sides feeling like they have lost. It’s much better to set things straight from the start. Zana Tomich is a co-founding partner of Dalton & Tomich, PLC based in Detroit. She frequently acts as an outside general counsel to small- and mid-sized businesses.

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N O R T H C A R O L I N A L A W Y E R S W E E K LY I Octo ber 25, 2021

AMENDMENTS / New rules raise questions of interpretation C o nt inu e d f r o m 4 ►

on appeal pursuant to Rule 9(d), any supplement prepared pursuant to Rule 11(c) or Rule 18(d)(3), and any additional materials filed pursuant to this Rule 9.” N.C. R. App. P. 9(a). Precise use of “printed record” and “record on appeal” terms. The amendments meticulously sort through every “record” reference to specify when a rule applies to the “printed record,” and when it applies to the broader “record on appeal.” For example, practitioners have long assumed that the provisions of Appellate Rule 9(b) (which address issues like unnecessary materials and file-stamps) only apply to the printed record. After all, Appellate Rule 11(c) allows any item that was “filed, served, submitted for consideration, admitted, or made the subject of an offer of proof” to be included within the “record on appeal”—irrespective of its relevance. The amendments confirm this understanding.

Time for filing the record on appeal

Under the old rules, an appellant had 15 days to file the “record on appeal” once it was settled. N.C. R. App. P. 12(a) (2020). But as noted previously, the appellate clerks instructed counsel to file the printed record first, and then wait until an appellate docketing number was assigned to file the remainder of the “record on appeal.” See N.C. R. App. P. 12(a) (2020). Otherwise, the record on appeal components could be filed under different appeal numbers and have to be sorted out by the clerk’s office staff. The new rules expressly require the appellant to file “the printed record, transcripts, copies of exhibits and other items included in the record on appeal pursuant to Rule 9(d), and any supplement prepared pursuant to Rule 11(c) or Rule 18(d)(3)” all within 15 days of the record being settled. Effectively, the 15-day filing requirement covers every component of the “record on appeal” other than original

items. See N.C. R. App. P. 12(a). Copies of oversized and tangible items need to be filed by the 15-day deadline, but they are deemed filed when placed in the mail or hand-delivered to the appellate clerk. See N.C. R. App. P. 26(a). Website updates coming—but don’t jump the gun. The Supreme Court’s technology department is working on a website update that will permit all record components to be filed at the same time (i.e., without waiting for an appellate docketing number). The new feature should be functioning when the amendments go into effect in 2022—but that new functionality is not ready just yet! Until either 2022 arrives or the appellate clerks give the bar the green-light to file everything at the same time, counsel should continue to (1) file the printed record, and (2) then file the remaining record components once a docket number is assigned to the appeal. In other words, don’t jump the gun on this new record filing procedure—the rumor is that Gene Soar has inherited Dan’s assault-weapon collection.

Prior notice and consultation before filing “motions”

The amendments have added a “notification and consent” requirement for all motions except for appeals involving pro se litigants. The new provision states that all appellate motions should (1) report “counsel’s good-faith effort to inform counsel for all other parties of the intended filing of the motion,” (2) “indicate whether the other parties consent to the relief being sought,” and (3) indicate “whether any other party intends to file a response.” N.C. R. App. P. 37(c). Virtually all the texts and emails I have received about the amendments in the past 24 hours have involved the scope of this new provision. Rather than respond to everyone individually, below is my best guess as of today as to the provision’s likely scope. Inapplicable to trial tribunal motions. This new notification requirement likely does not apply to appel-

late-related motions filed in the trial tribunal—i.e., first motions to extend transcript and proposed record deadlines. My basis for thinking that? The title of Appellate Rule 37 is “Motions in Appellate Courts.” Motions for which ex parte relief is expressly authorized elsewhere. This new rule appears to apply to emergency motions for a temporary stay (i.e., those frequently filed with petitions for writ of supersedeas).The tension is that the Appellate Rules also authorize “ex parte” motions for a temporary stay “for good cause shown.” See N.C. R. App. P. 23; Appendix D. Similarly, although the new consultation provision would likely be most helpful when deciding extension of time motions, Appellate Rule 27(d) provides that “motions for extension of time made in any court may be determined ex parte” when filed “before the expiration of the time for which the extension is sought.” Perhaps the consultation rule’s use of the words “should” and “good-faith” are designed to provide flexibility to not consult with opposing counsel “for good cause shown”—for example, during emergency situations or when prior consultation would permit an opposing party to prejudice the interests of the moving party? But I do not know. Motions for Which Opposition Is Obvious. How many times have you seen opposing counsel consent to motions to dismiss an appeal, motions for sanctions, motions for rehearing en banc, motions for stay of execution, or motions for appropriate relief? While these motions are almost always opposed, the consultation requirement appears to apply. Motions for Which Consent Is Routinely Given. On the other hand, consider the motions which counsel have historically had no opposition to: motions to extend a transcriptionist’s deadline, motions to substitute counsel, motions for pro hac vice admission, or motions to file confidential materials under seal. Whether this new consultation provision will encourage opposition to these routine motions

PRIOR RECORD LEVEL / C o nt inu e d f r o m 1 ►

of his two misdemeanors. Because Bunting stipulated the calculation of points and his status as a Level IV offender, the state claimed that he had no grounds for appealing the court’s alleged miscalculation, and the state had met its burden of proving Bunting’s prior record level by the preponderance of the evidence. But while stipulation is one method of proving prior convictions, a defendant can’t stipulate to a question of law, the appeals court said, and a trial court must still make a legal determination by reviewing the proper classification of a prior offense to calculate the points assigned. Nor can a defendant stipulate to a prior record level calculation that includes felony convictions used for establishing his status as a habitual felon. Bunting didn’t challenge the points charged for the two misdemeanors but argued that the record is unclear as to which five felonies were counted for purposes of determining his prior record level points. He contended—and the appeals court agreed—that state law prohibits a trial court from considering the three predicate felony convictions (six points) that establish his habitual felon status. And though an out-of-state conviction may be used for determining a defendant’s prior record level, the state must prove that the conviction is substantially similar to a particular North Carolina felony. While Bunting could have properly stip-

ulated to his conviction in another state and that offense is considered a felony there, a trial court must make a legal determination by reviewing the proper classification of an offense. In this case, the trial court must determine that Bunting’s outof-state felony conviction for strangulation would translate to a felony offense in North Carolina. The upshot of all of that was that the convictions eligible for consideration—two North Carolina felonies and two misdemeanors—would total just six points. How the trial court reached its record level calculation was thus unclear, but the appeals court determined that something was erroneously applied and that the record level worksheet wasn’t sufficiently “definite and certain” to constitute a valid stipulation by Bunting. “In the instant case, the trial court had to have either included one or more of Defendant’s out-ofstate convictions or one or more of Defendant’s prior felonies used to establish his habitual felon status in order to reach 12 points in calculating Defendant’s prior conviction points,” Carpenter wrote. Attorney General Joshua Stein and Assistant Attorney General Mary Maloney represented the state. Kimberly Hoppin of Chapel Hill represented Bunting. Hoppin did not immediately return a request for comment. The 12-page decision is State v. Bunting (Lawyers Weekly No. 011-202-21).The full text of the opinion is available online at nclawyersweekly.com.

remains to be seen.

WebEx oral arguments to remain an option post-pandemic

The Appellate Rules now explicitly authorize deviations from traditional, in-person oral argument either on the court’s own motion or on the motion of any party. N.C. R. App. P. 30(d). (Note: the text of old Appellate Rule 30(d) authorizing the submission of a case to the appellate courts on written briefs by party agreement has been moved to new Appellate Rule 30(f)(3)).

Miscellaneous

Assorted references to filing “single copies” and “papers” have been deleted. In an e-filing world, those concepts no longer make sense. The amendments clarify that Appellate Rule 26(g)(1)’s requirements for “letter size” filings and the use of particular fonts apply only to documents “composed for the appeal” (i.e., appellate briefs and petitions, as opposed to trial tribunal materials in the record on appeal). Appellate Rule 27(a) governs how weekends and holidays impact the calculation of deadlines under the appellate rules. The new rules now state that a legal holiday is “when the courthouse is closed for transactions.” Because federal and state legal holidays are not always identical, the update clarifies that documents can still be due on a federal holiday if the state appellate courts remain open for regular business. A similar phrase is found in Rule of Civil Procedure 6(a). The amendments include several other clean-up (non-substantive) changes. Beth Scherer is a North Carolina State Bar Board Certified Appellate Practice Specialist at Fox Rothschild in Raleigh. She focuses her practice on helping businesses and attorneys navigate state and federal appeals. Beth is also the co-author of North Carolina Appellate Practice & Procedure, a treatise available through Lexis.

CRASH / C o nt inu e d f r o m 3 ►

generation and an earlier operation. Hughes’ earlier back problems dated to a 2007 surgery, and he had experienced pain on isolated occasions over the years, such as falling on ice or during a rear-end crash. Hughes countered by offering expert testimony from a neurosurgeon. F. Davis Poisson III said that Hughes had experienced neck pain within half an hour of the incident. “[The neurosurgeon] said that it was an aggravation of the prior degeneration and the prior two-level fusion,” Poisson said. “It all kind of combined to cause the need for surgery.” Hughes also introduced testimony from an accident reconstruction expert who concluded from tire markings on the road that the vehicle was accelerating at the time of the impact and was traveling about 30 to 35 mph when it struck the curb. Poisson said that McGinty contended in deposition testimony that he’d been slowing down at the time of impact with the six-inch tall obstruction. Hughes requested nearly $400,000 at trial. The trial lasted for four days, and jurors deliberated for a little less than an hour before reaching a verdict on July 2. The jurors awarded $326,000, but the matter was settled after trial for a $300,000 policy limit plus $7,500 for costs. Nationwide had made an offer of just $500 before Hughes filed his lawsuit, and eventually made a $12,500 offer of judgment, Poisson said. William Robinson of Robinson, Elliot & Smith in Charlotte represented McGinty. He declined to comment on the settlement. Poisson said that the construction company didn’t appear in court and effectively defaulted, although this wound up not mattering due to the eventual settlement. McGinty did not pass his driving examination.

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N O R T H C A R O L I N A L A W Y E R S W E E K LY I O c t obe r 25, 2021

PRIVILEGE / Protestor was protected, lawyers not so much C o nt inu e d f r o m 1 ►

“Even when attorneys are participants in a judicial proceeding, the absolute privilege only extends to statements made during the course of their participation in (or in preliminary matters related to) those proceedings,” Hampson wrote. “Thus, absolute privilege does not apply to allegedly defamatory statements made by an attorney when they are not participating in the judicial proceeding.”

Privilege may apply to election protests

Hampson first determined that the election protests at issue constituted quasi-judicial proceedings to which the absolute privilege against defamation suits might apply. As a general rule, a defamatory statement made in the due course of a judicial proceeding is absolutely privileged and will not support a civil action for defamation, even if it is made with express malice. The North Carolina Supreme Court has recognized the State Board of Elections acts as a quasi-judicial body in the context of considering protests concerning the conduct of an election. “Thus, election protest proceedings before County Boards of Elections fall squarely in the category of quasi-judicial proceedings,” Hampson wrote. “Therefore, statements made or submitted to a County Board of Elections in an election protest are statements made in the course of a quasi-judicial proceeding. Consequently, as a general principle,

absolute privilege applies to defamatory statements made in the course of an election protest filed with a County Board of Elections.” Applying that principle to the various defendants, the court had little trouble finding that Porter was entitled to absolute privilege for the allegedly defamatory statements made in his protest. “Porter was the actual protestor in the Guilford County Protest filed against Bouvier and the Niehans,” Hampson wrote. “The allegedly defamatory statements made by Porter were those adopted by him and made on the protest form filed with the Guilford County Board of Elections upon which he authorized his signature as a party. Thus, Porter is entitled to the protection of absolute privilege from suit in this case.”

No participation, no protection

The law firm defendants and the defense fund failed to trigger the protection of absolute privilege, however. Although the law firm defendants were adamant that they were not “participants” in the election protest—stating that their efforts did not constitute legal work or the practice of law—they argued that because their allegedly defamatory statements were included in the election protest forms filed with the respective County Boards of Elections, they benefited from absolute privilege. But that was not the case, Hampson said. “The law firm defendants have disclaimed acting as attorneys for the protestors in the election protest proceedings,” he wrote. “They did not appear

at the hearings before the Guilford and Brunswick County Boards of Elections on the protests. In fact, it does not appear the law firm defendants were licensed or authorized to practice law in North Carolina at the time the election protests were filed. As such, the allegedly defamatory statements attributed to the law firm defendants were not made while they were participating as counsel in the election protest proceeding.” Even acting as agents of Porter and Agovino by drafting and filing the protests was insufficient, Hampson said, because the law firm defendants were acting in their capacity as counsel to the defense fund, leaving the individual protestors to initiate and prosecute the actual protest proceedings pro se. “Thus, the statements attributed to the law firm defendants were not made by the law firm defendants in the course of a quasi-judicial proceeding and are not entitled to the protection of the absolute privilege against defamation suits,” he wrote. Hampson reached a similar determination with regard to the defense fund, which made no argument that it was a party, witness, potential witness, or acting in any representative capacity in the course of the election protest proceeding. “Indeed, the record here reflects the defense fund expressly made the decision not to take part in the election protest proceedings,” he wrote. “Instead, the defense fund authorized the law firm defendants to prepare the election protests containing false and allegedly defamatory accusations of voter fraud against plaintiffs, use those allegations

to recruit individuals like Porter and Agovino, and convince them to adopt those accusations and file protests based on those false statements.” Jeffrey Loperfido, senior counsel at Southern Coalition for Social Justice (SCSJ) in Durham, represented the plaintiffs. “The defendants’ baseless claims of voter fraud, wielded in a last-ditch effort to sow doubt in the results of our state’s 2016 elections, upended the lives and reputations of innocent North Carolinians who were simply exercising their fundamental right to vote,” Allison Riggs, SCSJ co-executive director and chief counsel for voting rights, said in a statement. “We applaud the Court of Appeals’ ruling in favor of these North Carolina voters and vow to keep fighting so that no person experiences this kind of voter intimidating in the future. Philip R. Isley of Blanchard, Miller, Lewis & Isley in Raleigh, who represented the defense fund, declined to comment other than to point out that a petition for en banc rehearing by the Court of Appeals has already been filed on behalf of his client as well as the law firm defendants. (To date, no petition for such an en banc hearing has ever been successful.) Gary S. Parsons of Brooks Pierce in Raleigh represented the law firm defendants. Jewel A. Farlow of Greensboro represented Porter. Neither responded to a request for comment. The 31-page decision is Bouvier v. Porter (Lawyers Weekly No. 011-19121). The full text of the opinion is available online at nclawyersweekly.com.

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N O R T H C A R O L I N A L A W Y E R S W E E K LY I Octo ber 25, 2021

Opinions N.C. COURT OF APPEALS

11

N.C. BUSINESS COURT

14

N.C. COURT OF APPEALS, UNPUBLISHED

George for petitioner; Bethany Burgon, James Adams and Forrest Campbell for respondents. 2021-NCCOA-536

N.C. COURT OF APPEALS

Administrative

Domestic Relations

CON – Demonstration Project – Fixed Extremity MRI – Project End – Full Capacity MRI

Parent & Child – Abuse, Neglect & Dependency – Conflicting Stories – Unexplained Burn

The respondent-intervenor medical practice obtained a certificate of need for a fixed extremity MRI scanner as part of a demonstration project. Within one year after the respondent-agency declared the project at an end, the practice applied for a change to offer additional MRI services at the diagnostic center created when it initially acquired its limited-use MEI scanner. The practice’s application falls squarely within the plain language of G.S. § 131E-176(16)(e), so the agency properly issued an expanded certificate of need to the practice. We affirm summary judgment for the agency. Wake Radiology Diagnostic Imaging LLC v. North Carolina Department of Health & Human Services (Lawyers Weekly No. 011205-21, 14 pp.) (Richard Dietz, J.) Appealed from the Office of Administrative Hearings (Stacey Bice Bawtinhimer, ALJ) Frank Kirschbaum and Charles

Infant “Wade” suffered severe burns while in the care of his paternal grandmother. Even in the absence of a clear explanation of how Wade was burned, the trial court could find that his injuries were non-accidental based on its findings of fact that (1) the paternal grandmother had made several threats to or regarding the respondent-Mother or the parties’ three children on the day of Wade’s injury; (2) respondents and the paternal grandmother repeated multiple, inconsistent stories regarding the events surrounding Wade’s injuries, who was caring for Wade on the date of his injuries, and when treatment was sought; (3) respondents provided vague improbable explanations regarding the mechanism of the injury; (4) respondents’ final story of events— blaming their toddler daughter—was “highly unlikely”; and (5) doctors treating Wade had reasons to suspect abuse in respondents’ home. We affirm the trial court’s adjudica-

18

tion of Wade as abused, neglected and dependent and its adjudication of his elder siblings, “Wren” and “Wes,” as neglected and dependent. We find no merit to respondents’ argument that witness testimony is required to support a finding that an

injury is “non-accidental.” Mother knew of the paternal grandmother’s unstable behavior, which necessitated medication, and the substantial risk of physical injury her volatile conduct posed to the children. Despite this risk, Mother allowed the paternal

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12 / OPINION DIGESTS grandmother to continue to care for her children, and she failed to take steps to ensure her children were properly supervised and protected. Unchallenged findings of fact establish the paternal grandmother pointed a gun and threatened Mother while Mother was holding Wes when he was an infant due to the paternal grandmother failing to take her medication; the paternal grandmother was verbally abusive to Mother when she did not take her medication; and, on the day of the injury, the paternal grandmother left the small children alone in the home and later called Mother’s manager at work to call Mother names, and to threaten “someone [would] take care of [Mother’s] kids for her” if she did not. Therefore, the trial court’s adjudication of abuse is supported by findings of fact, which are in turn deemed supported by clear and convincing evidence. Where respondents were unable to suggest a suitable placement for the children, and where respondents refused to allow a DSS inspection of their own home to determine its suitability, the trial court could conclude that the children were dependent. Since one of the conditions that led to the children’s adjudication was a lack of care and supervision, the requirement that Mother show proof of income is reasonably related to ensuring the children have adequate care and supervision. Although Mother argues there was no evidence in the record that she suffered from mental illness, the trial court could require that she “refrain from allowing mental health to impact parenting.” The trial court found that Mother had conspired with the respondent-Father and the paternal grandmother “to develop a completely false narrative” about Wade’s injuries and that Mother “promulgated [a] false narrative” about her toddler child being at fault for Wade’s burns support the trial court’s mandate. Additionally, physicians and social workers had reason to suspect domestic violence occurred in respondents’ home but “could never get mom alone” and the social workers were never able to complete their in-home review before the adjudication petitions were filed. The trial court’s decree is reasonably related to ensuring the children’s safety and proper supervision. Affirmed. In re W.C.T. (Lawyers Weekly No. 011-206-21, 42 pp.) (Jeffery Carpenter, J.) Appealed from Alamance County District Court (Kathryn Overby, J.) Wendy Walker for petitioner; Wendy Sotolongo, Lee Gilliam and Edward Eldred for respondents; Brian Bern-

N O R T H C A R O L I N A L A W Y E R S W E E K LY I O c t obe r 25, 2021

hardt for guardian ad litem. 2021-NCCOA-569

Labor & Employment Public Employees – Unacceptable Personal Conduct – Exterminators’ Database – False Information The petitioner-state employee failed to timely enter a pest control company’s license-renewal application. Subsequently, although a co-worker had already processed the company’s reapplication and new check, petitioner overrode multiple failsafe mechanisms in the respondent-department’s database and thereby knowingly entered false information into the database when she asked the IT department to substitute the number of the company’s original check for the number of its new check. Moreover, petitioner also lied and withheld information during respondent’s investigation into the incident. We affirm the Administrative Law Judge’s decision to uphold petitioner’s termination for unacceptable personal conduct. Locklear v. North Carolina Department of Agriculture & Consumer Services (Lawyers Weekly No. 011-207-21, 24 pp.) (Donna Stroud, C.J.) Appealed from the Office of Administrative Hearings (Tenisha Jacobs, ALJ) Jennifer Knox for petitioner; Christopher McLennan for respondent. 2021-NCCOA-604

Real Property Incompetent Grantor – Guardianship – Limited & Durable Powers of Attorney Where an elderly mother had been declared incompetent, and where there was evidence forecast that (1) the defendant-daughter used a questionable durable power of attorney to sell her mother’s home (in which her brothers were living at the time), (2) the daughter put her mother in a facility without telling the rest of the family, and (3) the daughter offered one brother $20,000 of the sale proceeds while she would keep the other $75,000, there are genuine issues of material fact precluding summary judgment for the defendantpurchaser. We reverse summary judgment for the defendant-purchaser. Although the mother purportedly executed a durable power of attorney (DPO) naming her daughter as her attorney-in-fact on 11 January 2017,

there is also evidence in the record indicating that the daughter had not obtained her mother’s power of attorney as of 12 January 2017, when the mother’s doctor noted her increasing dementia. Moreover, by the time the daughter used the power of attorney to sell her mother’s home, the mother had been declared incompetent, and the daughter had not qualified as her guardian. Plaintiff William Leary recorded a general power of attorney from the mother on 7 May 2017. It is disputed whether William’s power of attorney was durable, i.e., whether it continued after the mother became incompetent. A genuine issue of material fact exists as to whether plaintiffs have standing to challenge the sale of the mother’s home. On 8 June 2018, the mother was declared incompetent to make legal decisions or to execute legal documents. In that order, the trial court gave the daughter a chance to qualify as her mother’s guardian. However, the daughter failed to qualify as her mother’s guardian. Plaintiffs point out that, despite the fact that the mother had been declared incompetent, no special proceeding was initiated under G.S. § 35A-1301 to approve the sale of her home. Moreover, an attorney-in-fact is accountable to the court-appointed guardian of an incompetent, as well as to the attorney-infact’s principal, for such a sale and the accounting of any proceeds therefrom. We also note that the daughter did not file her DPA, purportedly executed on 11 January 2017, until 21 October 2019, after the sale of her mother’s home and 11 days after this lawsuit was filed. A reasonable jury could find that the daughter’s failure to record the purported DPA for more than two and a half years and until almost a month after the home was sold and 11 days after this lawsuit was filed demonstrates that the 11 January 2017 DPA was not actually executed on that date or it was not executed by the mother. A reasonable jury could also find the mother lacked capacity to authorize a limited power of attorney that the daughter contends the mother executed on 6 September 2019. Genuine issues of material fact existed regarding (1) the daughter’s authority, her purported DPA and limited power of attorney to sign the deed without prior court approval and (2) the proper disposition of the proceeds from the sale. Reversed and remanded. Leary v. Anderson (Lawyers Weekly No. 011-208-21, 19 pp.) (John Tyson, J.) Appealed from Mecklenburg County Superior Court (Carla Archie,

J.) Alesha Brown for plaintiffs; Robert McNeill and Alexandra Edge for defendant-appellee. 2021-NCCOA-560

Real Property Easements – First Impression – Strangers’ Construction – Riparian Rights Although defendants’ predecessorsin-title granted plaintiff an easement with virtually unlimited authority to “treat” the property “in any manner,” the easement does not give plaintiff the authority to permit strangers to the easement to use the burdened land for the strangers’ own benefit. However, such strangers may have riparian rights that will allow them to install piers or other structures to allow them access to navigable water. We reverse partial summary judgment for plaintiff and remand.

Facts

When plaintiff decided to dam the Catawba River and create Lake Norman, most owners of land that would be submerged sold their land to plaintiff. However, defendants’ predecessorsin-title granted plaintiff easements instead. When the river was dammed and the lake formed, defendants’ predecessors were left with an island. They subdivided the island and sold lots to others, while retaining one lot for themselves. The purchasers of the island lots applied to plaintiff for permission to build wharves, piers, etc., to allow them to access the waters of Lake Norman. Defendants contend their predecessors’ easement does not give plaintiff the authority to allow these strangers to the easements to build on defendants’ submerged land.

Analysis

Despite the breadth of the rights granted to plaintiff by the easements, we are cognizant that defendants’ predecessors chose to grant easements rather than a conveyance in fee simple. The question of whether an easement holder with virtually unlimited authority to treat property in any manner has the power to permit strangers to the agreement to use the land for their own benefit has not been squarely addressed in this state. We are guided by Lovin v. Crisp, 36 N.C. App. 185, 243 S.E.2d 406 (1978), to hold that, unless an easement explicitly states otherwise, an easement holder may not permit strangers to the easement agreement to make use of the land,

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N O R T H C A R O L I N A L A W Y E R S W E E K LY I Octo ber 25, 2021

other than for the use and benefit of the easement holder, without the consent of the landowner where such use would constitute additional burdens upon the servient tenement. Here the island lot owners are not mentioned in the easements and are, thus, strangers to the easement agreement. These third parties had no property interest in the land at issue when the easements were created. Therefore, absent other considerations, plaintiff exceeded its scope of authority by permitting the third parties to construct and maintain structures over and into defendants’ submerged land without defendants’ consent. It may be argued that plaintiff’s deed of easement allows it to assign its easement rights to the third parties, rather than merely grant permissive use of the land at issue. However, plaintiff has not granted or conveyed to the third parties its rights under the easements. Plaintiff has allowed the third parties to use the land subject to the easement in accordance with permits issued by plaintiff and without consent from the owner of the servient estate. Plaintiff’s license with the Federal Energy Regulatory Commission requires plaintiff to possess certain authority to manage and control shoreline development at Lake Norman, so as to maintain plaintiff’s license and standing with the FERC. However, such requirement does not, by itself, beget nor provide delegated authority to overburden or deprive others of their property. Plaintiff had the authority and opportunity to seize in fee the property of defendants’ predecessors through eminent domain but, instead, elected to

negotiate an easement with the predecessors. Consequently, plaintiff never acquired fee title to the submerged land and cannot now assert its authority under its FERC license as if it possessed the land in fee simple. As a result, plaintiff is limited to the uses and exercise of dominion over the defendants’ parcel to those expressly granted in the easements. The Federal Power Act does not give plaintiff more rights than those it acquired in the easements. Plaintiff does not have the authority to grant the third parties the right to permit others to use defendants’ property without defendants’ assent because doing so would allow the taking of defendants’ property without just compensation. Irrespective of the easement, plaintiff and the third parties assert the public trust doctrine and riparian rights as the source of their rights to erect and maintain docks and other such structures that provide access from the third parties’ lots to the waters of Lake Norman. Even man-made bodies of water are subject to navigability for the purpose of the public trust doctrine. However, when evaluating the navigability of an artificial lake, our sparse caselaw suggests that an artificial lake is navigable only when it arises from or is connected to already natural, navigable-in-fact waters. The mere fact that a dam has been placed across a navigable stream, without more, does not suffice to render that stream non-navigable. Additionally, irrespective of the ownership of submerged land, riparian owners enjoy the right of access over an extension of their waterfronts to

navigable water, and the right to construct wharfs, piers, or landings. The existence of riparian rights hinges upon the same navigability test as the public trust doctrine. The navigability of a watercourse is largely a question of fact. While a prior opinion of this court has suggested that the Catawba River may be navigable in its natural state, it has only done so in dicta. There is a genuine issue of material fact as to the navigability of the Catawba River. Reversed and remanded. Duke Energy Carolinas, LLC v. Kiser (Lawyers Weekly No. 011-20921, 24 pp.) (April Wood, J.) Appealed from Catawba County Superior Court (Nathaniel Poovey, J.) Ty McTier and David Redding for defendants; Kiran Mehta and Victoria Alvarez for plaintiff; Mark Childers, Kevin Donaldson, Marshall Horsman and David Parker for third-party defendants. 2021-NCCOA-558

Labor & Employment Public Employees – School Bus Driver – Unacceptable Personal Conduct – Speeding Where (1) a witness testified that he saw the petitioner-bus driver driving a school activity bus on the highway at speeds up to 90 mph; (2) in order to make the trip in the time it took petitioner to drive it, she had to be averaging 70 mph; and (3) petitioner acknowledged work rules prohibiting her from driving in excess of 55 mph, the record supports the administrative law judge’s

decision to uphold petitioner’s termination for grossly inefficient job performance and unacceptable personal conduct. Affirmed. Sharpe-Johnson v. NC Department of Public Instruction (Lawyers Weekly No. 011-210-21, 14 pp.) (Allegra Collins, J.) Appealed from the Office of Administrative Hearings (William Culpepper, ALJ) Jennifer Knox for petitioner; Stephanie Lloyd for respondent. 2021-NCCOA-562

Criminal Practice Competency Hearing – Prior Evaluations – Same Behavior Defendant’s strange and combative behaviors during trial were the same behaviors that had led to two prior competency evaluations, both of which found him competent to stand trial. Defendant’s behaviors do not suggest a change in competency warranting a sua sponte hearing. We find no error in defendant’s convictions for three counts of first-degree murder. As to the issue of an impasse with trial counsel, we dismiss without prejudice. Defendant’s conduct at trial did not amount to substantial evidence requiring the trial court to sua sponte conduct a competency hearing in the face of two prior evaluations concluding he was competent. His actions were all either (1) the subject of a prior evaluation deeming him competent to stand trial; (2) indicative of an unwillingness— rather than inability—to work with

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14 / OPINION DIGESTS counsel; (3) suggestive of malingering and performative exaggeration; or (4) demonstrative of an understanding of the evidence, charges, and proceeding against him. State v. Sander (Lawyers Weekly No. 011-211-21, 22 pp.) (Lucy Inman, J.) Appealed from Wake County Superior Court (Graham Shirley, J.) Teresa Postell for the state; David Andrews for defendant. 2021-NCCOA-566

Criminal Practice Death by Motor Vehicle – Sentencing – Aggravating Factors – Stipulations – Elements of Crime In agreeing to plead guilty to felony death by motor vehicle, defendant stipulated to three aggravating factors. However, the only evidence available to support two of the aggravating factors was also required to prove essential elements of felony death by motor vehicle. Defendant’s stipulation that he “was armed with a deadly weapon at the time of the crime” is supported only by evidence that defendant was driving a vehicle when the crime occurred. Because felony death by motor vehicle requires that a defendant be engaged in impaired driving, evidence that defendant was driving a vehicle cannot also be used to support the “deadly weapon” aggravating factor. Defendant’s stipulation that the victim “suffered serious injury that is permanent and debilitating” is supported only by evidence that the victim was killed in the collision caused by defendant. Because this is also an essential element of felony death by motor vehicle, the trial court erred in finding this aggravating factor. We vacate the judgment entered upon defendant’s conviction and remand for a new disposition. Defendant also stipulated that he “knowingly created a great risk of death to more than one person…” This factor was supported by evidence of defendant’s speeding and reckless driving, neither of which is an element of felony death by motor vehicle. However, since the trial judge erred in finding two of the aggravating factors and imposed a judgment beyond the presumptive term, we would ordinarily remand for a new sentencing hearing. But because defendant stipulated to the existence of the aggravating factors in his plea agreement and now seeks to repudiate this part of the agreement, we are further required to vacate the plea agreement and remand for a new disposition rather than remand for a new sentencing hearing. State v. Heggs (Lawyers Weekly No. 011-212-21, 10 pp.) (Jefferson Griffin, J.) Appealed from Wake County Superior Court (Graham Shirley, J.) Neil Dalton for the state; Brennan Aberle for defendant. 2021-NCCOA-564

Criminal Practice Jury & Jurors – Judge’s Comments – Structural Error – Race & Religion When an African-American member of the jury pool said his Baptist religion wouldn’t let him decide the defendant’s guilt, the trial judge, while excusing that juror, made comments chastising African-Americans for not being willing to sit on juries, and she said that her own Baptist religion did not prevent her from deciding whether the state had met its burden of proof. The state concedes that this was structural error. Defendant is entitled to a new trial. The judge said, “Okay. I’m going— we’re going to excuse him for cause, but

let me just say this, and especially to African Americans: Everyday we are in the newspaper stating we don’t get fairness in the judicial system. Every single day. But none of us—most African Americans do not want to serve on a jury. And 90 percent of the time, it’s an African American defendant. So we walk off these juries and we leave open the opportunity for—for juries to exist with no African American sitting on them, to give an African American defendant a fair trial. So we cannot keep complaining if we’re going to be part of the problem. Now I grew up Baptist, too. And there’s nothing about a Baptist background that says we can’t listen to the evidence and decide whether this gentleman, sitting over at this table, was treated the way he was supposed to be treated and was given— was charged the way he was supposed to be charged. But if your—your non[denominational] Baptist tells you can’t do that, you are now excused.” Although defendant failed to object, we elect to review the merits of his argument pursuant to N.C. R. App. P. 2. Defendant argues the trial court’s statements “intimidated the jurors from exercising their beliefs, free will, or judgment throughout the remainder of jury selection and the trial” and “also surprisingly interjected race into this matter.” The trial court’s interjection of race and religion could have negatively influenced the jury selection process. After observing the trial court admonish one prospective juror in an address to the entire venire, other potential jurors—especially African American jurors—would likely be reluctant to respond openly and frankly to questions during jury selection regarding their ability to be fair and neutral, particularly if their concerns arose from their religious beliefs. We hold the trial’s statements constituted structural error and award defendant a new trial.

Dissent

(Dillon, J.): It may be true that a judge’s comments that affect the impartiality of the jury may constitute error, even constitutional error. However, such comments do not constitute “structural error.” That is, such comments are not per se reversible. Rather, there must be an analysis concerning the prejudice caused by the comments. Further, structural error should be preserved at trial. Defendant had the opportunity to object to the trial judge’s comments and ask for a continuance, where a new jury pool would be available, but no objection was made. And defendant has not articulated how manifest injustice would result by our court refusing to invoke Rule 2 to consider his unpreserved constitutional arguments. Assuming we were to reach defendant’s arguments concerning the trial judge’s inappropriate comments, I do not see how the comments were prejudicial against defendant. I do not see any likelihood that someone remained on the jury who abandoned his/her presumption that defendant was innocent based on anything the trial judge said. Also, I do not see any likelihood that her comments caused someone to be seated on the jury who was prejudiced against defendant, who would have otherwise spoken up about his/her prejudice but for the trial judge’s comments. Defendant had a fair trial, free from reversible error. State v. Campbell (Lawyers Weekly No. 011-213-21, 17 pp.) (Donna Stroud, C.J.) Appealed from the Superior Court in Guilford County (Lora Christine Cubbage, J.) Thomas Campbell for the state; Anne Bleyman for de-

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fendant. 2021-NCCOA-563

Criminal Practice Constitutional – Speedy Appeal – Transcript Delay Even though the court reporter’s ten extension requests resulted in a yearlong delay in defendant’s appeal, our application of the factors from Barker v. Wingo, 407 U.S. 514 (1972), shows that the delay in processing defendant’s appeal did not rise to the level of a due process violation. We find no error or plain error in defendant’s convictions for discharging a weapon into an occupied moving vehicle, assault with a deadly weapon with intent to kill, attempted-first-degree murder and possession of a firearm by a felon. The one-year delay in processing defendant’s appeal is sufficient to trigger review of the remaining Barker factors. However, since the delay was due to neutral factors, and not due to neglect or willfulness of the state, the court reporter’s delay does not weigh in defendant’s favor. Defendant did not assert his right to a speedy appeal prior to his brief on appeal. Defendant’s failure to formally and affirmatively assert his speedy appeal right weighs against his contention that he has been unconstitutionally denied a speedy appeal. Finally, we consider defendant’s allegations of prejudice in light of the interests protected by the right to a speedy appeal: (i) to prevent oppressive pretrial incarceration; (ii) to minimize anxiety and concern of the accused; and (iii) to limit the possibility that the defense will be impaired. Courts will not presume that a delay in prosecution has prejudiced the accused. Concerning the first two interests, defendant asserts that his incarceration during the Covid-19 pandemic was “uniquely stressful and oppressive.” Concerning the third interest, defendant argues that the delay diminished his memory of the events and hindered his ability to correct mistakes in the transcript, thereby prejudicing his appeal. Defendant’s general allegations of faded memory are not sufficient to show prejudice resulting from delay. Defendant has failed to show that evidence lost by delay was significant and would have been beneficial. Further, the transcript eventually prepared and made available to the parties was adequate to allow full development of appeal issues. Acknowledging defendant’s allegation of stress caused by incarceration during the pandemic, we find that defendant has failed to show prejudice resulting from the delay. After balancing the four factors set out above, we hold that the delay in processing defendant’s appeal did not rise to the level of a due process violation. In its instructions to the jury on the charge of attempted murder, the trial court told the jury that it could infer malice if the state proved that defendant had intentionally inflicted a wound upon the victim with a deadly weapon. Since there was no evidence that the victim was physically wounded, the state could not meet its burden of proving that defendant intentionally inflicted a wound upon the victim; therefore, the jury was not permitted to infer malice. We cannot say that the challenged jury instruction had a probable impact on the jury’s finding that defendant was guilty. No plain error; no error. State v. Neal (Lawyers Weekly No.

011-214-21, 22 pp.) (Allegra Collins, J.) Appealed from Alamance County Superior Court (David Lambeth, J.) Mary Carla Babb for the state; Meghan Adelle Jones for defendant. 2021-NCCOA-656

N.C. BUSINESS COURT

Contract Misappropriation – Defamation – Tortious Interference – Deceptive Trade Practices Defendants were granted leave to assert new counterclaims and an affirmative defense that defendants first discovered after deposing plaintiff’s representative and then briefly but reasonably investigating the statements made in that deposition. We grant defendants’ motion for leave to amend their answer to assert new counterclaims and a new affirmative defense. Defendants stole product designs and business plans of its manufacturer to allow defendant to copy, manufacture, and sell its own products in direct competition with plaintiff. Defendants moved for leave to amend their answer to assert three counterclaims against plaintiff, including defamation, tortious interference, and deceptive trade practices. Defendants also sought to add an affirmative defense under the statute of frauds to plaintiff’s claim for breach of the implied covenant of good faith and fair dealing. Plaintiff opposed defendants’ motion, arguing that the court lacked personal jurisdiction over plaintiff to adjudicate defendants’ counterclaims. Plaintiff further argued that defendants’ proposed amendments should be barred on grounds of undue delay, futility, bad faith, and prejudice. We grant defendants’ motion for leave to amend their answer. We rely on federal jurisprudence to hold that a plaintiff becomes subject to the court’s jurisdiction for a defendant’s counterclaims simply by having filed an action in that court. By filing a lawsuit in a judicial district, a plaintiff waives objections to personal jurisdiction and venue, or alternatively, consents to both. We further find that defendants’ proposed amendment is not barred on grounds of undue delay, futility, bad faith, or prejudice. We note that defendants’ amendment was based on statements made by plaintiff’s executive during his deposition, which defendants reasonably sought to further investigate. Defendants then promptly filed their motion after concluding their investigation. We permit additional discovery limited to defendants’ new counterclaims and affirmative defense. Granted. Vitaform, Inc. v. Aeroflow, Inc. (Lawyers Weekly No. 020-058-21, 15 pp.) (Louis A. Bledsoe, J.) Smith DeVoss, PLLC, by Jeffrey J. Smith and John R. DeVoss, and Wimer & Snider, P.C., by Jake A. Snider, for plaintiff; Ward and Smith, P.A., by Joseph A. Schouten and Haley R. Wells, for defendants. 2021 NCBC 58

Corporate First Impression – Derivative Action – Claims against Directors – Joint Representation of Corporation and Directors Dual representation of a corporation and its directors in a shareholder de-

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rivative action was permissible where shareholders had not alleged serious misconduct by the directors, such as theft, fraud, or self-dealing. We deny plaintiffs’ motion to disqualify counsel from dual representation of the corporation and its directors in a derivative action. Defendant corporation was a family owned business that operated a propane and refined fuel distribution business. Plaintiffs, who owned approximately 34 percent of the com-

pany’s shares and served as officers of the company, filed a derivative action against the company and two of their family members who served as directors of the company. Plaintiffs alleged that defendants breached their fiduciary duties relating to their efforts to give operational control of the company to their son, Jason, due to nepotism rather than merit. Plaintiffs cite critical reviews of Jason’s job performance from various company employees. The individual defendants’ law firm,

OPINION DIGESTS / 15 Womble Bond, also entered an appearance on behalf of the company, with the attorney who had appeared on behalf of the company moving to withdraw. Plaintiffs moved to disqualify Womble Bond from representing the company, arguing that joint representation of the company and its directors posed a conflict of interest. We hold that dual representation of a corporation and its directors in a shareholder derivative action may be permissible in cases where serious

charges of wrongdoing have not been levied against the directors, such as fraud, theft, or self-dealing. We agree with other courts that have held that allegations of breach of the fiduciary duty of care do not rise to the level of seriousness necessary to bar dual representation. We find that plaintiffs’ complaint merely alleges a disagreement over the way the company is being run and how plaintiffs’ role in the company is being diminished. We therefore deny plaintiffs’ motion to disqualify and grant

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16 / OPINION DIGESTS counsel’s motion to withdraw. Denied. Mauck v. Cherry Oil, Inc. (Lawyers Weekly No. 020-059-21, 20 pp.) (Mark A. Davis, J.) Brooks, Pierce, McLendon, Humphrey and Leonard LLP, by Walter L. Tippett and Katarina K. Wong for plaintiffs; Graebe Hanna & Sullivan, PLLC, by M. Todd Sullivan, for Defendant Cherry Oil, Inc., and Womble Bond Dickinson (US) LLP, by Samuel B. Hartzell and Pressly M. Millen for defendants. 2021 NCBC 59

A negligent misrepresentation claim arising from pre-contractual conduct was not barred by the economic loss rule. We deny defendants’ motion to partially dismiss plaintiffs’ complaint. Plaintiffs invested in defendant corporation, based on the representation that the company would use investor funds to develop doctor’s offices and other healthcare properties. Plaintiffs invested several million dollars, documented in eight promissory notes. When plaintiffs stopped receiving payment on their notes, an investigation revealed that individual defendant had redirected the invested funds to a separate company he owned, using the funds for personal purposes. Plaintiffs filed suit, alleging fraud, breach of contract, and negligent misrepresentation. Defendants moved to dismiss plaintiffs’ negligent misrepresentation claim, arguing that the claim was barred by the economic loss rule and that defendants owed plaintiffs no duty of care. We deny defendants’ motion to dismiss, finding that plaintiffs’ negligent misrepresentation claim arose from pre-contractual representations that the individual defendant made to induce plaintiffs to invest. Thus, plaintiffs’ claim is wholly separate from the parties’ contracts. We further find that plaintiffs sufficiently alleged that the individual defendant owed a duty to plaintiffs when convincing them to invest. Denied. Lipov v. Flagship Healthcare Properties, LLC (Lawyers Weekly No. 020-060-21, 6 pp.) (Adam M. Conrad, J.) Nelson, Mullins, Riley & Scarborough LLP, by David N. Allen, Thomas G. Hooper, and Anna Majestro for plaintiffs; Moore & Van Allen PLLC, by Scott M. Tyler, Joshua D. Lanning, and Raquel Macgregor Pearkes for defendants. 2021 NCBC 60

owner. Defendant contacted plaintiff and offered him the Atlanta territory. Plaintiff alleged that the parties’ oral agreement was to give him the whole Atlanta marketing area as his sales area. After plaintiff began operating Tony Turner’s stores, defendant then requested that plaintiff assume the debt previously incurred by Tony. Defendant also requested that plaintiff allow Mark Turner to continue operating his stores in south Atlanta until his license expired. Defendant later created a new trade area out of seven counties in the Atlanta trade area, licensing that area to a third party. Plaintiffs accordingly filed suit alleging breach of contract, unjust enrichment, tortious interference, and deceptive trade practices. Defendants moved for leave to amend their answers to assert additional affirmative defenses of waiver and expiration of the statute of limitations. Defendants also moved for summary judgment. We grant in part and deny in part defendants’ motion for leave to amend and deny their motion for summary judgment. We find no prejudice to plaintiffs in allowing defendants to assert waiver and statute of limitations defenses, which defendants alleged they first discovered after deposing plaintiffs. However, we deny leave to amend to assert those defenses under phase I of the case management order. But we deny defendants summary judgment, finding that plaintiffs had presented sufficient evidence to establish a prima facie claim that the parties had mutually assented to definite terms in an oral contract, which allows their breach of contract claim to proceed. We find that the inconsistencies in plaintiffs’ testimony cited by defendants went to the issue of credibility, rather than definitively proving that the parties had no meeting of the minds. Granted in part and denied in part. Window World of North Atlanta, Inc. v. Window World, Inc. (Lawyers Weekly No. 020-061-21, 22 pp.) (Louis A. Bledsoe, J.) Brooks, Pierce, McLendon, Humphrey & Leonard LLP, by Charles E. Coble, Andrew L. Rodenbough, Benjamin R. Norman, and Robert J. King, III, and Keogh Cox & Wilson, Ltd., by John P. Wolff, III, Virginia J. McLin, and Richard W. Wolff for plaintiffs; Wilson Ratledge, PLLC, by Reginald B. Gillespie, Jr. and Alexandra M. Bradley, and Manning, Fulton & Skinner, P.A., by Judson A. Welborn, Michael T. Medford, Natalie M. Rice, and Jessica B. Vickers, and Laffey, Leitner & Goode LLC, by Joseph S. Goode, Mark M. Leitner, Sarah E. Thomas Pagels, John W. Halpin, and Jessica L. Farley for defendants. 2019 NCBC 53

Contract

Civil Practice

Franchise Agreement – Breach – Motion for Leave to Amend

Default Judgment – Bonding Requirement – Clarification

Plaintiffs would not be prejudiced by defendants amending their answer to assert affirmative defenses that defendants first became aware of following plaintiffs’ deposition. We grant in part and deny in part defendants’ motion for leave to amend their answer to assert additional affirmative defenses but deny defendants’ motion for summary judgment. Defendant licensed franchises to other business to operate a window, door, and siding retailer. Defendant had sold a franchise in the Atlanta area to two brothers, Mark and Tony Turner. Due to their alleged mismanagement of the stores, defendant sought to license the franchise territory to another store

Upon plaintiffs’ motion, (1) the court clarifies that no bond need be posted before plaintiffs execute on the default judgment against defendant AppyCity, which was served with process via certified mail; (2) having been presented no principled argument for a reduction in the amounts of the bonds required to execute on the default judgment against the individual defendants, the court declines to reduce the amount of such bonds; and (3) the court clarifies that each plaintiff must post their own bond, but each plaintiff need post only one bond, not a separate bond for each individual defendant. The court grants in part and denies in part plaintiffs’ motion for reconsid-

Securities Fraud – Embezzlement of Investment Funds – Negligent Misrepresentation

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eration and clarification. KBT Realty Services, Inc. v. AppyCity, LLC (Lawyers Weekly No. 020-062-21, 7 pp.) (Michael Robinson, J.) Grady Richardson and Jennifer Carpenter for plaintiffs. 2021 NCBC 62

Tort/Negligence Conversion – Intangible Property – Accounting Practice – Breach of Fiduciary Duty Where plaintiffs allege that defendants converted their “customer list” and “business assets,” but where plaintiffs’ counsel admitted that “customer list” actually refers to their decedent’s client relationships while “business assets” refers to the “goodwill” of the decedent’s company, plaintiffs have not alleged the conversion of any goods or tangible personal property. The court grants defendants’ motion to dismiss.

Background

Plaintiffs’ decedent formed and owned plaintiff DS & T II, Inc. (DS&T), to provide accounting and tax services to its clients. Defendant Elbahrawi worked as an independent contractor for DS&T. When the IRS began investigating the decedent, he and Elbahrawi formed defendant D & E Tax and Accounting, Inc. (D & E), to carry on the accounting business. When the decedent went to prison for tax fraud, non-party Ashraf Ali was added to D & E’s bank account to “look after” the decedent’s interests.

Conversion

Neither past relationships nor goodwill constitutes goods or tangible personal property upon which a claim for conversion may be based. Any alleged benefit flowing to D & E from the decedent’s past relationships with customers while working at DS&T is in the nature of a business opportunity or expectancy and cannot support a claim for conversion.

Breach of Fiduciary Duty

Since there are no indications that Elbahrawi was a majority shareholder and that he dominated or controlled D & E, much less that he did so unfairly, plaintiffs have not alleged that Elbahrawi owed a fiduciary duty to the decedent as a joint shareholder in D & E. The complaint fails to allege that the decedent objected to the transfer of DS&T’s clients and “business assets” to D & E at the beginning of the IRS investigation. To the contrary, it was the decedent’s attorney who recommended the transfer of work. The decedent readily participated in D & E before and after his incarceration. Nowhere do plaintiffs claim that the decedent was oppressed. They allege that the decedent, and not Elbahrawi, had control over D & E’s management and the servicing of D & E’s clients, and that the decedent ran D & E “as an owner” and “paid himself as an owner.” The facts alleged in the complaint show that no fiduciary duty, either de jure or de facto in nature, existed between the decedent and Elbahrawi. The court dismisses plaintiffs’ claim of breach of fiduciary duty.

Breach of Contract

Plaintiffs (DS&T, along with the executor of the decedent’s estate and the trustee of his testamentary trust) allege they had an “understanding” with defendants that plaintiffs’ business operations would continue after the IRS investigation began under the name D & E, but ownership of the “business

assets” would not transfer. They allege defendants have breached their agreement. However, plaintiffs’ complaint does not allege the terms that were breached. Reference to an “understanding” regarding ownership of client relationships and goodwill is insufficient to allege the existence of an enforceable contract between the parties, particularly in light of other allegations stating that discussions between the decedent and Elbahrawi on the subject were protracted and that “no deal was reached” regarding the client list and other business assets before the decedent’s death in 2015. Plaintiffs have failed to state a claim for breach of contract.

Quantum Meruit

A claim in quantum meruit has a three-year statute of limitations. The complaint alleges that a benefit was conferred on defendants when DS&T’s clients moved to D & E in 2007. A claim made 13 years later is time-barred. Motion granted. DS & T II, Inc. v. D & E Tax & Accounting, Inc. (Lawyers Weekly No. 020-063-21, 22 pp.) (Julianna Theall Earp, J.) John Wait for plaintiffs; Lee Denton, Rayford Kennedy Adams and Kayla Russell for defendants. 2021 NCBC 63

Civil Practice Discovery – Attorney-Client Privilege & Work Product Doctrine – LLC Operating Agreement – Drafts & Emails Where the individual defendants had already stated their intentions with regard to transferring the assets of a non-profit association to their newly formed for-profit limited liability company and a non-profit foundation, the operating agreement drafts created by defendants’ counsel are not subject to the crime-fraud exception to the attorney-client privilege. The court denies plaintiffs’ motion to compel production of the LLC operating agreement drafts and related emails with substantive discussions thereof. The court grants plaintiffs’ motion as to emails which simply transmitted draft versions of the operating agreement. Confidential Communication Email communications accompanying the LLC operating agreement drafts indicate that they were sent between clients and counsel for discussion and revision. Even those portions of the drafts that went through the process unchanged and became part of the final operating agreement were first subject to attorney scrutiny. Other portions of the drafts reflect legal advice in the form of marginal comments and redline edits made by counsel. Given this e-mail traffic revealing that defendants’ intent was not to publish the drafts until their counsel had fully advised them regarding revisions, the drafts are protected by the attorneyclient privilege.

Implicit Waiver

An e-mail from the nominal defendant-association’s board members to the association’s members, which plaintiffs argue put attorney advice at issue, is dated 6 April 2020 and refers to the past (“… the attorney has reviewed ... and confirmed”). The earliest date of the documents at issue—drafts of the operating agreement and accompanying communications with counsel—is 9 April 2020. Consequently, the 6 April 2020 e-mail, which predates the documents at issue, could not have referred to them and, therefore, cannot be con-

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sidered a waiver as to them. Indeed, the documents produced for in camera review do not express an opinion regarding whether the association’s restructuring efforts complied with the law or not. Moreover, it is unclear who “the attorney” referenced in the email is and whether that person is the same counsel consulted with respect to the LLC’s operating agreement. On these facts, the 6 April 2020 email referencing a review done by an attorney at some point in the past does not result in waiver of the privilege with respect to subsequent drafts of the LLC’s operating agreement and the accompanying attorney-client communications.

Fiduciary Exception

The fiduciary exception has not been recognized by the North Carolina state courts. However, in jurisdictions that have recognized the fiduciary exception, courts have generally found the fiduciary exception inapplicable to communications made during a time when the parties’ interests were not aligned or when the subject of the communications did not involve matters that a fiduciary would owe a duty to disclose to a beneficiary. Thus, even if the exception were to be recognized in this state’s jurisprudence, since the parties’ interests were not aligned when the communications occurred, the fiduciary exception is inapplicable.

Crime-Fraud Exception

The crime-fraud exception eliminates attorney-client privilege protection when a client uses legal representation for an improper purpose such as to commit or facilitate a crime or fraud. North Carolina courts have recognized the crime-fraud exception to the attorney-client privilege. Past or completed crimes or frauds do not trigger the exception. At the time the communications in this case occurred, defendants had already communicated their intention to be the only members of the LLC—at least for the time-being—and to finance the LLC and the foundation with association funds. While they may or may not have fully understood the legal ramifications resulting from the transfer of association funds at the time the transfer occurred, defendants point out that the operating agreement that was thereafter created clearly reflected the distribution to the new entities. Accordingly, plaintiffs have not alleged that the attorneys were consulted to facilitate criminal or fraudulent activity that was ongoing or was to take place in the future. Plaintiffs have failed to carry their burden to show by a preponderance of the evidence that the crime-fraud exception applies to defeat the assertion of attorney-client privilege over drafts of the operating agreement.

Work-Product Doctrine

Although the threat of litigation may have been in the air, the independent business reason for drafting the operating agreement to govern the LLC strips the resulting drafts from work product protection. Therefore, any drafts not protected by the attorney-client privilege would not be shielded from discovery by the work product doctrine. Here, however, the attorney-client privilege insulates the drafts at issue from discovery

Related Email Communications

A number of e-mails in question are in the nature of “transmittal” communications. When the e-mails do not

furnish or request legal advice and are merely transmittal documents, they are not attorney-client privileged communications. On the other hand, more substantive e-mails are protected by the privilege. There is no dispute that counsel represented the LLC, the communications were intended to be confidential and relate to a matter about which counsel was being professionally consulted, and the communications were made in the course of giving or seeking legal advice for a proper purpose. Plaintiffs’ arguments regarding waiver or application of an exception to the privilege does not change the result. The attorney-client privilege protects these communications. Motion granted in part, denied in part. Ford v. Jurgens (Lawyers Weekly No. 020-064-21, 22 pp.) (Julianna Theall Earp, J.) Clint Morse, Katarina Wong and James Bobbitt for plaintiffs; Michael Ostrander, Donald Harris, Jeffrey Keister, Sean Madden, Michael Ostrander, Thomas Buckley and Allegra Amelia Sinclair for defendants.2021 NCBC 64

Contract Release – Affirmative Defense – Untimely – Non-Disparagement When one of the plaintiff-franchisees sold one of his franchises in 2013, he signed a contract which released all claims against the defendant-franchisor. Since the release did not include a covenant not to sue, it cannot form the basis of a counterclaim. The court grants in part and denies in part plaintiffs’ motion to dismiss defendants’ newly filed counterclaims. Although the 2013 release could form the basis of an affirmative defense, defendants have not pled it as such. Considering the length of time defendants waited to assert their counterclaim, the court declines to treat the counterclaims for breach of release as an affirmative defense. Furthermore, given the delay between discovery of the 2013 contract and defendants’ assertion of their counterclaim based on the release, defendants’ release counterclaim is also barred by the threeyear statute of limitations. The 2013 contract also included a covenant not to disparage defendants. Defendants allege that plaintiff Williamson breached that covenant by telling another franchisee that defendants’ new logo was “ridiculous.” Defendants’ counterclaim based on disparagement may proceed against Williamson. Window World of St. Louis, Inc. v. Window World, Inc. (Lawyers Weekly No. 020-065-21, 32 pp.) (Louis Bledsoe, C.J.) Andrew Rodenbough, Charles Coble, Robert King, Benjamin Norman, John Wolff, Virginia McLin and Richard Wolff for plaintiffs; Judson Welborn, Michael Medford, Natalie Rice, Jessica Vickers, Joseph Goode, Mark Leitner, Jessica Farley, Sarah Thomas Pagels, John Halpin, Andrew Freeman and Alan Ruley for defendants. 2021 NCBC 65

Partnerships Joint Venture – Tort/Negligence – Breach of Fiduciary Duty – RV Park After country club members protested plaintiff and defendant Packer’s joint venture to start an RV park at the country club, Packer told plaintiff he did not think the joint venture was

OPINION DIGESTS / 17 reasonable “in the current environment.” Thereafter, Packer partnered with other defendants to try again, and plaintiff’s attorney sent Packer a letter which a jury could read as demanding information related to the joint venture. Packer’s failure to meaningfully respond to this letter could be construed as a breach of the fiduciary duty owed between members of a joint venture. The court grants summary judgment for defendants on plaintiff’s claims, except as to the failure to respond to plaintiff’s demand for information related to the joint venture. The court denies defendant KPP, LLC’s motion for summary judgment on its counterclaim for tortious interference with contract. Plaintiff’s claim for breach of fiduciary duty fails to the extent it relies on allegations that joint venture assets were used in connection with the new project. Plaintiff has failed to come forward with admissible evidence to rebut the sworn testimony of defendants Packer and Barry Poole that no assets belonging to the joint venture were used in connection with the new project. While plaintiff seeks to compare the joint venture’s design plans with photos of the new project’s progress, without accompanying testimony from a witness possessing specialized knowledge on this technical subject, the “compare documents” are insufficient to preclude summary judgment on the issue of whether the new project actually used the joint venture’s site design plans. The court declines plaintiff’s request for reconsideration of the court’s prior partial judgment on the pleadings. First, plaintiff included its request in its summary-judgment brief rather than submitting a separate motion for reconsideration as required by Business Court Rule 7.2. Second, the judgment at issue was rendered by a different judge, and one superior court judge may not overrule another superior court judge in this situation, i.e., where the judgment was based on the allegations of the complaint, which has not been amended. Where plaintiff made no demand for the return of specific joint venture assets which were lawfully in Packer’s possession, plaintiff has not made out a claim for conversion. Even if plaintiff shows that Packer breached his fiduciary duty to plaintiff, acts relating to the internal conduct of a partnership are not “in or affecting commerce” for purposes of a claim of unfair trade practices. Even if some limited fiduciary duties were still owed in relation to the joint venture, these limited fiduciary duties did not impede Packer from participating in the new RV park project. Plaintiff has failed to make out a claim for civil conspiracy. KPP is not entitled to summary judgment on its counterclaim for tortious interference with contract. Plaintiff’s principal averred in his affidavit that he did not contact any of the third parties who contracted to purchase lots in the new RV park project. Although KPP argues that plaintiff’s mere filing of a notice of lis pendens is sufficient to show inducement not to perform a contract, neither KPP’s brief nor the court’s own research has identified any North Carolina case so holding. Motions granted in part, denied in part. Morris International, Inc v. Packer (Lawyers Weekly No. 020066-21, 29 pp.) (Mark Davis, J.) Bradley Morris for plaintiff; Gerald Meek, Christopher Vann, Alexandra Bachman and Fred Monroe for defendants. 2021 NCBC 66

Insurance Flood – Hurricane Damage – Homeowners’ Dues Interruption – Excess Coverage Trigger – First Impression On a question of first impression, the court finds that the language of an excess flood insurance policy clearly bars plaintiff from suing the defendant-excess insurer for breach of contract until the primary flood insurer has admitted liability for or paid its coverage limits. Defendants’ motions to dismiss are granted in part and denied in part. The plaintiff-homeowners’ association’s property was damaged by Hurricane Florence, and plaintiff suffered a resulting loss of homeowners’ dues. Plaintiff has sued, not only its primary flood insurer, but also its excess flood insurer. However, the excess flood insurance policy states that “liability attaches to the Underwriters only after the Primary and Underlying Excess Insurer(s) have paid or have admitted liability for the full amount of their respective Ultimate Net Loss liability…” Plaintiff does not allege that the primary flood insurer has either paid or admitted liability for the full amount of its policy limits. Although plaintiff has alleged that its damages exceed the primary flood policy’s limits, this allegation, by itself, is not enough to trigger the excess coverage based on the clear and unambiguous terms of the excess flood policy. Plaintiff’s claims against the excess flood insurer—for breach of contract, bad faith, and unfair trade practices— are premature. They are dismissed without prejudice. In support of its bad faith and unfair trade practices claims against the primary flood insurer, plaintiff alleges that the insurer has ignored information submitted by plaintiff, failed to perform an adequate investigation of plaintiff’s claim, engaged in delay tactics, misrepresented material facts regarding policy provisions, and failed to timely respond to communications from plaintiff. Reading the complaint in the light most favorable to plaintiff, it alleges conduct that could potentially give rise to liability on theories of bad faith and violation of the Unfair and Deceptive Trade Practices Act. In a negligence claim against the defendant-insurance broker and his agency, plaintiff alleges that these agency defendants negligently failed to procure insurance that would protect plaintiff against a loss of homeowners’ dues. However, the liability policy procured by the agency defendants provides, “We will pay for the actual loss of Business Income you sustain due to the necessary ‘suspension’ of your ‘operations’ during the ‘period of restoration’. The ‘suspension’ must be caused by direct physical loss of or damage to property at premises which are described in the Declarations and for which a Business Income Limit Of Insurance is shown in the Declarations.” Contrary to plaintiff’s argument, this coverage does not require plaintiff to cease doing business before it applies. The policy language is broad enough to encompass plaintiff’s claim for loss of dues. Plaintiff’s negligence claim against the agency defendants is contradicted by the express terms of the liability policy. Plaintiff has not stated a negligence claim against the agency defendants. Motions granted in part, denied in part. Villa Capriani Homeowners Association, Inc. v. Lexington Insurance Co. (Lawyers Weekly No.

18 / OPINION DIGESTS 020-067-21, 22 pp.) (Mark Davis, J.) Noel Allen, Marina Pucheco, Michael Childress, Christopher Noyes, Shant Karnikian and Barret Alexander for plaintiff; Thomas Contois, Anna Cathcart, Erik Tomberg, Kathryn Anne Grace, Brianne Glass and Mihael Medford for defendants. 2021 NCBC 67

Tort/Negligence Unfair Trade Practices – LLC Ownership Interests – ‘Commerce’ – Fraud Allegations Matters of internal corporate management do not affect commerce as defined by G.S. Chapter 75. The fact that other entities benefited from the alleged deceptive conduct while plaintiff did not does not make the dispute one “in and affecting commerce.” Defendants’ motions to dismiss are granted in part and denied in part.

Allegations

Plaintiff is an Arizona limited liability company and a member of Criticality, LLC (Criticality Arizona). Criticality Arizona was organized to operate a business involving the extraction of CBD oil from hemp. The hemp was to be grown in North Carolina, where the processing plant would also be located. Defendant Propheter was in charge of day-to-day operations in North Carolina. While he negotiated funding and operation of the business, he gave plaintiff misleading information and withheld information. Plaintiff ended up owning a smaller interest in the business than it expected to, and it never received an accounting of two of plaintiff’s sales of interest in the business to third parties.

Fraud

The complaint alleges that Propheter’s communications with plaintiff made deceitful references to “Criticality,” leading plaintiff to believe Propheter was referring to Criticality Arizona when Propheter was actually referring to the newly formed North Carolina LLC, Criticality (Criticality NC) and deceiving plaintiff into contributing resources to Criticality NC while believing it was benefiting Criticality Arizona. Plaintiff also used Criticality Arizona’s trademark and logo in social media posts without revealing that the structure of the deal had changed to involve Criticality NC. The complaint also identifies other misleading communications, as well as Propheter’s initial failure to disclose the sales of interest in Criticality NC and his failure to provide plaintiff with information regarding the terms of the sales or distributions of the sales proceeds. The complaint alleges that Propheter’s tactics induced plaintiff to continue to allow Propheter to manage the dayto-day business operations and that Propheter ultimately “used his position to materially deviate from the agreed upon terms ... without disclosing such terms to Plaintiff, to Plaintiff’s detriment, by diluting Plaintiff’s ownership in the ultimate operating entity.” Plaintiff has sufficiently alleged that (1) there was a relationship between plaintiff and Propheter that gave rise to the duty to speak and (2) Propheter took steps to conceal material facts from plaintiff. Plaintiff has alleged the elements of fraud and negligent misrepresentation against Propheter.

Unfair Trade Practices

Matters of internal corporate management do not affect commerce as defined by Chapter 75 and our Supreme Court.

The fact that another entity or entities benefitted from the alleged deceptive conduct while plaintiff did not does not make the dispute one “in and affecting commerce.” Although the caselaw with respect to intracompany and intercompany disputes can be confusing, the distinction lies in the nature of the second entity’s involvement with the first. If the harm is to the second entity or to the flow of commerce between the first and second entities, commerce is impacted. However, if the second entity is used merely as an instrument to facilitate harm within the first entity, the dispute is intracorporate, and the Unfair and Deceptive Trade Practices Act is not implicated. Plaintiff alleges that Propheter created Criticality NC to divert opportunities away from Criticality Arizona and away from plaintiff, as the co-member of Criticality Arizona. The court agrees with defendants that the focus of the deception was on Criticality Arizona and its members and was not “in or affecting commerce.” Plaintiff has not stated a claim for unfair trade practices.

Other Issues

Criticality Arizona was organized under the Arizona Limited Liability Company Act. That act does not impose fiduciary duties to the members of the LLC on fellow LLC members or on operations managers. Plaintiff has not alleged that Criticality Arizona’s operating agreement imposed such duties. Plaintiff has failed to state a claim for breach of fiduciary duty. Where plaintiff’s conversion claim alleges dilution in ownership and diversion of corporate profits (i.e., business expectancy), the claim fails to allege conversion of goods or tangible personal property. Therefore, the complaint fails to state a claim for conversion. Motions granted in part, denied in part. Botanisol Holdings II, LLC v. Propheter (Lawyers Weekly No. 020068-21, 28 pp.) (Julianna Theall Earp, J.) Laurie Biggsm Trawick Stubbs and Jimmie Banks Hicks for plaintiff; Phillip Hornthal, Andrew Howle, John Michael Durnovich, Andrew Erteschik, David Long and Colin McGrath for defendants. 2021 NCBC 68

Corporate Declaratory Judgment – LLC Membership – Inspection Rights – Fraud & Breach of Contract The complaint alleges the percentage interests that the plaintiff-investors claim to possess in defendant Omni Holding Group, LLC; that records received from Omni contain conflicting information concerning those interests; that Omni and defendant Alshalabi have refused to produce additional information despite many requests; and that there is a real controversy regarding plaintiffs’ “legal ownership and membership in Omni.” These allegations tend to show that an actual controversy exists and that a judicial declaration would likely remove the uncertainty as to plaintiffs’ interests in Omni. Therefore, plaintiffs have stated a claim for a declaratory judgment. Defendants’ motion to dismiss is granted in part and denied in part. Plaintiffs have alleged that they made a demand for documents under G.S. § 57D-3-04 and that Omni refused to allow inspection of those documents. Plaintiffs have stated a claim for inspection against Omni. However, § 57D-3-04 gives an LLC member inspection rights against the LLC, not its members or managers.

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The court dismisses the inspection claim as it pertains to Alshalabi. Although an unfulfilled promise is not fraudulent unless made with no intent to carry it out, plaintiffs have alleged that Alshalabi “had a specific intent not to perform on his promises” at the time he made them. Moreover, contrary to defendants’ argument, the economic-loss rule does not bar fraud claims. Plaintiffs have stated a claim for fraud. Given the complaint’s allegation of fraud, it would be premature to hold that the merger clause in the parties’ written contract forecloses a claim for breach of the parties’ oral agreement. However, the complaint does not allege that Alshalabi is a party to the contract; therefore, the complaint does not state a claim for breach of contract against Alshalabi. Elhulu v. Alshalabi (Lawyers Weekly No. 020-069-21, 9 pp.) (Adam Conrad, J.) William Sitton for plaintiffs; Jonah Garson, Alan Parry and Gerald Meek for defendants. 2021 NCBC 69

N.C. COURT OF APPEALS, UNPUBLISHED

Criminal Practice Statutory Rape – Duress Defense – Intermittent Threats – No Avoidance Although defendant claimed to have an abusive boyfriend who held a knife to her throat to force her to have intimate relations with the boyfriend’s minor nephew, defendant also admitted that her boyfriend did not hold her at knifepoint every time she engaged in sexual relations with the victim. Moreover, defendant willingly drove herself and the minor victim to a wooded area to have sexual intercourse. Defendant was not entitled to a jury instruction on the defense of duress. We find no error in defendant’s convictions for six counts of taking indecent liberties with a child, three counts of statutory rape/sex offense, and three counts of statutory rape of a child. While defendant suggested that her boyfriend “controlled” her and would not allow her to be apart from him, she admitted she went to work and socialized publicly with friends and family. Thus, defendant had numerous opportunities to avoid committing the illegal act of having sexual intercourse with a minor child. Defendant had her own cell phone, but the record does not reveal she ever used it to call law enforcement. Assuming arguendo that defendant was under duress at any time during the two to three years she had a sexually intimate relationship with a minor child, she forfeited this defense by failing to contact law enforcement during that time. Because defendant did not qualify for a jury instruction on duress, her trial counsel’s failure to request such an instruction did not prejudice defendant. State v. Beckwith (Lawyers Weekly No. 012-302-21, 13 pp.) (April Wood, J.) Appealed from Beaufort County Superior Court (Walter Godwin, J.) Catherine Laney for the state; Mark Hayes for defendant. 2021-NCCOA-471

Criminal Practice Possession of a Stolen Firearm – Guilty Knowledge – Hidden – Evidence – Unspent Rounds Since defendant was a convicted

felon—making possession of a firearm illegal for him—hiding a gun under the seat of his girlfriend’s car did not suggest that defendant knew the firearm was stolen. The state failed to present additional evidence of incriminating behavior from which a reasonable juror, when viewing all evidence in the light most favorable to the state, could draw an inference of guilt of possession of a stolen firearm. We reverse defendant’s conviction for possession of a stolen firearm. We find no error in defendant’s conviction for possession of a firearm by a felon. The state was not required to prove an unbroken chain of custody for unspent ammunition seized from defendant’s satchel because a law enforcement officer testified both that the ammunition found in the satchel and the ammunition loaded in the seized firearm were consistent, meaning all rounds exhibited the same headstamp, and they were in the same or substantially similar condition as the day law enforcement seized them. The ammunition was readily identifiable and not susceptible to alteration, so the state was not required to establish a chain of custody for the ammunition. The absence of explicit documentation of the ammunition’s chain of custody speaks to the weight of the evidence and not its admissibility. State v Nivens (Lawyers Weekly No. 012-303-21, 16 pp.) (April Wood, J.) Appealed from Cabarrus County Superior Court (William Wood, J.) Matthew Bream for the state; Benjamin Kull for defendant. 2021-NCCOA-480

Criminal Practice Felony Hit & Run – ‘Scene of the Accident’ – 800-900 Yards Away Neither the General Assembly nor our courts have defined “scene of the accident” for purposes of our felony hit and run statute, G.S. § 20-166. Nevertheless, defendant left the scene of the accident he had caused when he walked 800 to 900 yards away, out of sight of the accident. We find no error in defendant’s convictions for felony possession of cocaine, misdemeanor death by vehicle, driving while license revoked for impaired driving, failure to yield, and felony hit and run resulting in serious bodily injury or death. We dismiss defendant’s claim of ineffective assistance of counsel without prejudice to his right to file a motion for appropriate relief. Justification or excuse for leaving the scene of the accident was not a substantial feature of defendant’s case, so the trial court did not err when it failed to instruct the jury that his failure to remain at the scene was “willful, that it is, it was intentional.” Assuming arguendo defendant’s requested instruction had been given, it is not probable that the jury would have concluded that defendant had a vindicating reason for leaving the scene of the accident. Defendant did not request a special instruction defining the phrase “scene of the crash” and did not object to the charge given by the trial court. Moreover, on appeal, defendant acknowledges that the phrase “scene of the crash” is not defined in § 20-166, “nor has this Court or the Supreme Court defined it.” A defendant fails to meet his burden under plain-error review where he fails to cite to any case law or statute which requires the trial court to define the requested terms during its jury instruction. For this reason, and for the same reasons that the trial court did not commit plain error by failing to expand upon the term “willful,” we over-

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rule this assignment of error. A driver who caused an accident may leave the scene if staying would mean risking injury. Defendant was not entitled to a jury instruction on the risk-of-injury defense. Defendant walked hundreds of yards away from the crash site and never returned. The evidence adduced at trial suggested that it was physically safe to remain much closer to the vehicle as multiple civilian onlookers had safely gathered approximately 100 yards from the crash site in the wake of the accident. Moreover, the trial record is devoid of evidence indicating that defendant’s departure from the scene was necessary to remove himself or others from significant risk of injury. Indeed, given that off-duty emergency medical technicians asked defendant to reenter and remain in his vehicle while they attended to the victim, it is more probable than not that remaining with his car posed minimal if any risk of injury to defendant. Put simply, defendant has failed to show that substantial evidence supported the omitted risk-of-injury jury instruction. No error; dismissed in part. State v. Dillard (Lawyers Weekly No. 012-304-21, 29 pp.) (John Arrowood, J.) Appealed from Forsyth County Superior Court (David Hall, J.) Shawn Maier for the state; Craig Cooley for defendant. 2021-NCCOA-474

Civil Practice Stalking or Harassment – Facebook Posts – ‘About’ Plaintiff On his Facebook page, defendant accused plaintiff of using her own Facebook groups to harass the families of missing persons. According to plaintiff, defendant’s livestreams threatened plaintiff and insinuated that he or his followers should inflict violence on plaintiff. Although defendant’s social media posts and articles were “about” plaintiff, they were not “directed at” her. There was no evidence that defendant directed any other written communication “at” plaintiff. Accordingly, plaintiff failed to show that defendant stalked or harassed plaintiff within the meaning of G.S. Chapter 50C. We reverse the trial court’s no-contact order. Weller v. Jackson (Lawyers Weekly No. 012-305-21, 10 pp.) (John Arrowood, J.) Appealed from Onslow County District Court (Michael Surles, J.) No brief for plaintiff; Sarah Ludington and Nicole Ligon for defendant. 2021-NCCOA-484

Insurance Auto – Pro Se Victim – Chiropractor’s Lien Where an insurance settlement check appeared to have been endorsed by both the accident victim and her chiropractor, and where the chiropractor did not notify the defendant-insurer that the victim had cashed the check or that the chiropractor’s signature had been forged—until this lawsuit was filed—the insurer did not repeatedly refuse to reissue a check payable solely to the victim or the chiropractor, and the insurer’s actions did not amount to an inequitable assertion of its power as an insurer. We affirm summary judgment for the insurer on the chiropractor’s claims of unfair trade practices and bad faith. After her bus was sideswiped by defendant’s insured, Inez Holmes sought

treatment from the plaintiff-chiropractor. The chiropractor filed a lien, so the insurer made its check payable to both Holmes and the chiropractor. Holmes cashed the check herself, with the chiropractor’s name apparently forged on the back. There is no evidence in the record that defendant’s claims adjuster engaged in an unfair trade practice. There is no evidence that the adjuster acted with any intent to deceive or injure plaintiffs. Further, plaintiffs provided no evidence that an officer, director, or manager of defendant participated in the complained of conduct. The record is devoid of any evidence that defendant had a policy of issuing multi-party checks to pro se claimants and healthcare providers in an effort to prevent providers with liens from obtaining their share of settlement proceeds. While defendant did not issue two-party checks often, there is no evidence defendant issued the check in this instance fraudulently, maliciously, or without any regard to plaintiffs’ rights. Rather, the record reveals defendant issued the multi-party check to settle Holmes’ claim and allow payment to plaintiffs. Since the trial court did not find an unwarranted refusal to fully resolve the matter, the trial court did not abuse its discretion in denying plaintiffs’ request for attorney’s fees. Affirmed. Carolina ChiroCare & Rehab, Inc. v. Nationwide Property & Casualty Insurance Co. (Lawyers Weekly No. 012-306-21, 15 pp.) (April Wood, J.) Appealed from Wake County Superior Court (Rebecca Holt, J.) Brenton Adams for plaintiffs; Philip Collins for defendant. 2021-NCCOA-504

Domestic Relations DVPO – Subjective Fear – Insufficient Evidence Despite defendant’s angry and threatening statements, since plaintiff testified that (1) defendant made no overt threat to assault her, (2) she did not “feel” threatened, and (3) she feared, not for herself, but for the parties’ children and her other family members, no evidence shows that plaintiff subjectively feared imminent bodily injury to herself. Competent evidence does not support the trial court’s finding that defendant placed plaintiff in fear of imminent bodily injury. We reverse the domestic violence protective order. Although the evidence indicates that (1) defendant assaulted plaintiff’s cousin by shoving her out of the way and onto her bed, (2) the cousin was scared by defendant’s twice entering into her room and by his angry and erratic behavior, and (3) the cousin was afraid for plaintiff and her children, there is no evidence that the cousin was subjectively in fear of imminent serious bodily injury to herself. Thus, competent evidence does not support the trial court’s finding that defendant placed a member of plaintiff’s family in fear of imminent bodily injury. Competent evidence also does not support the trial court’s finding that defendant placed plaintiff in fear of continued harassment that rises to such a level as to inflict substantial emotional distress. Defendant’s behavior included abusive language, slamming doors, and threatening to “punt” or “throat punch” the parties’ young children (one and three years old, respectively), causing the children to cry and cower away from him, intruding into a wedding venue, multiple angry and agitated confronta-

tions with the cousin at the venue, and showing up at plaintiff’s grandfather’s home at 1:30 a.m. There is also evidence that plaintiff was placed in fear by the totality of this behavior, specifically for her family members and that defendant would forcibly remove or harm the children. Presuming defendant’s actions constitute “harassment” under G.S. § 14277.3A, there is nevertheless no evidence that plaintiff’s fear gave rise to substantial emotional distress beyond a generalized fear that defendant would attempt to take the children back home to Georgia. There is no evidence that plaintiff, herself, suffered from “substantial emotional distress” within the meaning of G.S. § 50B-1(a)(2). The trial court’s conclusion of law that defendant committed domestic violence against plaintiff and the children rested on (1) placing plaintiff and her cousin “in fear of imminent serious bodily injury” and (2) placing plaintiff in fear of “continued harassment, as defined in G.S. 14-277.3A, that rises to such a level as to inflict substantial emotional distress.” Since the trial court’s findings are not supported by competent evidence, the trial court erred in concluding that defendant committed acts of domestic violence against plaintiff and the children. Reversed. Hahn v. Hahn (Lawyers Weekly No. 012-307-21, 25 pp.) (Toby Hampson, J.) Appealed from Macon County District Court (Thomas Foster, J.) Zeyland McKinney for defendant; no brief filed for plaintiff. 2021-NCCOA-505

Domestic Relations Parent & Child – Neglect – Siblings – Dependency – Fixed & Ongoing Circumstances Even though the respondent-Mother gave birth in her bathroom, left newborn “Alexander” in the toilet, put him in a trash bag and left the bag in a trash bin in a church parking lot (where he was eventually found and rescued), the evidence also showed that, at the same time, Mother was caring for her specialneeds daughter, “Elenore.” The evidence that Mother neglected Alexander was insufficient to show that Mother also neglected Elenore. We reverse the trial court’s adjudication of Elenore as neglected. We vacate the trial court’s adjudication of Elenore and Alexander as dependent. Generally, post-petition evidence is not admissible during an adjudicatory hearing on abuse, neglect or dependency. However, a court may consider postpetition evidence that reflects a fixed and ongoing circumstances rather than a discrete event. Although DSS was initially unable to locate the children’s father, leading DSS to take quick action to safeguard the children after Mother’s arrest, the circumstances of the father’s paternity and his ability to potentially care for the children are fixed and ongoing circumstances. Since DSS located the father two days after filing its petition, and since he has been highly committed to reunification with the children, the trial court should have considered relevant evidence to prevent the adjudication of the children as dependent if they have at least one parent capable of providing for their care. We remand for the trial court to make findings of fact considering post-petition evidence regarding the father’s ability to properly care for the children and to provide an alternative child care arrangement. In re A.D.G.C. (Lawyers Weekly No. 012-308-21, 18 pp.) (Darren Jack-

son, J.) Appealed from New Hanover County District Court (J.H. Corpening, J.) Benjamin Kull for respondent; Jennifer Cooke for petitioner; Matthew Wunsche for guardian ad litem. 2021-NCCOA-506

Domestic Relations Parent & Child – Reunification Cessation – Murder Charge The trial court’s finding—that the respondent-Father was incarcerated and charged with the murder of another child—was insufficient to support a cessation of reunification efforts between Father and infant “James.” We affirm the adjudication of James as neglected, but we remand for further proceedings as to the issue of reunification efforts. The trial court failed to make any finding at disposition that a court of competent jurisdiction determines or has determined that (1) the parent has committed murder or voluntary manslaughter of another child by the parent, has aided, abetted, attempted, conspired, or solicited to commit murder or voluntary manslaughter of the child or another child of the parent, or has committed a felony assault resulting in serious bodily injury to the child or another child of the parent; or (2) aggravated circumstances exist because the parent has committed or encouraged the commission of, or allowed the continuation of any other act, practice, or conduct that increased the enormity or added to the injurious consequences of the abuse or neglect. G.S. § 7B-901(c) (1), (3). The only finding made was that Father has been “charged” with the murder of James’ sister, J.B. Therefore, we vacate the portion of the disposition order ceasing reunification efforts with Father. However, we affirm the neglect adjudication. G.S. § 7B-101(15) and our caselaw allow a trial court to rely on evidence of neglect resulting in death of other children. Contrary to Father’s assertion, an actual murder conviction is not required by the statute. The trial court relied on evidence that James’ sibling, J.B., had died from injuries inflicted in the parents’ home and forecasted the risk such an environment might pose to a newborn, as it was permitted to do. The trial court’s uncontested findings support its conclusions in adjudicating James as a neglected juvenile. Affirmed in part; vacated and remanded in part. In re J.H. (Lawyers Weekly No. 012-309-21, 9 pp.) (Chris Dillon, J.) Appealed from Robeson County District Court (Angelica McIntyre, J.) David Perez for respondent; Edward Yeager for petitioner; Matthew Wunsche for guardian ad litem. 2021-NCCOA-507

Domestic Relations Parent & Child – Reunification Cessation – Lack of Progress Where the respondent-Mother (1) had neither stable housing nor a source of income; (2) admitted that, in the past, she would stop taking the medication prescribed for her mental health issues; (3) had to take breaks during visitation with her five children because she could not “take it”; and (4) allowed a reported perpetrator of sexual abuse against two of her children to bring pizza to her and the children, the evidence supports the trial court’s finding that Mother had not addressed the issues which led to the children’s removal from her care.

20 / OPINION DIGESTS We affirm the trial court’s permanency planning orders, which eliminated reunification efforts between Mother and her children. During the preceding three years, the longest period that Mother had maintained housing was four and a half months. Her eight felony convictions presented a substantial barrier to her ability to obtain housing. Although Mother had an upcoming hearing on her application for disability payments, she owed about $30,000 in fraudulently received social security income, which she would have to reimburse if she won her disability appeal. Moreover, she had received around $15,000 in disability income for one of her children, but she had made no contribution to the cost of her children’s care. The children were thriving in their placements, and none of them asked to see or talk to Mother. In fact, one child told the guardian ad litem numerous times that he did not like visiting with Mother and did not want to live with her. Most of the children had prospective adoptive homes. The trial court’s findings properly addressed the concerns of G.S. § 7B906.2(b). Affirmed. In re T.T. (Lawyers Weekly No. 012-310-21, 19 pp.) (Jefferson Griffin, J.) Appealed from Scotland County District Court (Christopher Rhue, J.) Garron Michael for respondent; Brandi Jones Bullock for petitioner; Stephen Schoeberle for guardian ad litem. 2021-NCCOA-508

Real Property Condominium – Foreclosure – Prior Appeal – Attorney Fees On a prior appeal, this court declared the judicial foreclosure in this case void. The trial court erred when, on remand, it declared the judicial foreclosure valid. The judicial foreclosure must be unwound, and the defendantcondominium association is not entitled to attorney’s fees because it is not yet a prevailing party under G.S. §§ 47C-3116 and 47C-4- 117. The trial court’s orders are reversed in part, vacated in part, and remanded. Even though defendant’s request for an unavailable remedy, an execution sale, did not invoke the subject matter jurisdiction of the trial court, defendant’s alternative request for a judicial foreclosure sale was sufficient to invoke the trial court’s subject matter jurisdiction. Defendant could not obtain a foreclosure on the plaintiff-owner’s property without a valid order, which it has yet to obtain. We remand for further proceedings, which may include the ordering of a new judicial foreclosure on the property. On remand, the trial court must unwind the result of the voided judicial foreclosure; declare the original judicial foreclosure void; determine what amount, if any, is still owed to defendant; and, if appropriate, order a new judicial foreclosure on the property. Further, defendant owes restitution to plaintiff for the redemption amount paid as a result of the voided original judicial foreclosure, and the trial court must effectuate whatever restitution is appropriate in the unwinding of the voided judicial foreclosure. During the first appeal in this case, plaintiff’s appellate brief clearly abandoned its argument regarding defendant’s G.S. Chapter 75 counterclaim. Nevertheless, defendant included arguments regarding the Chapter 75 in its appellee brief. Defendant was not en-

titled to attorney’s fees for responding to the merits of the abandoned Chapter 75 issue in the first appeal; however, it was entitled to attorney’s fees for time spent on the issue before it was abandoned. On remand, the trial court must itemize its Chapter 75 attorney’s fee award to ensure defendant does not receive attorney’s fees for any time spent addressing the Chapter 75 issue after it was abandoned. Because this court declared the judicial foreclosure void, there was no prevailing party under G.S. §§ 47C-3116 and 47C-4-117. Accordingly, defendant was not entitled to an award of attorney’s fees under these statutes. Unless defendant obtains a judicial foreclosure for fines levied against plaintiff, it is not a prevailing party and is not entitled to attorney’s fees under these statutes or to costs under G.S. § 47C-3-116. Reversed in part, vacated in part and remanded. Slok, LLC v. Courtside Condominium Owners Association, Inc. (Lawyers Weekly No. 012-311-21, 29 pp.) (Hunter Murphy, J.) Appealed from Mecklenburg County Superior Court (George Bell, J.) Preston Odom and Alexander Heroy for plaintiff; Michelle Massingale Dressler for defendant. 2021-NCCOA-509

Criminal Practice Jury & Jurors – Requested Instruction – Accident Defense – Juror’s Prop Gun After his arrest for shooting the victim, defendant told law enforcement, “We were fighting. Shots went off.” However, the uncontradicted evidence at trial showed that, after a physical altercation between defendant and the victim, defendant was physically separated from the victim, yet defendant intentionally drew his weapon from its holster and fired three shots at the victim, hitting him twice. The record is devoid of any evidence that anyone other than defendant was touching the weapon at the time it was discharged by defendant; likewise, there was no evidence that defendant inadvertently pulled the trigger. Thus, defendant was not entitled to a jury instruction on the defense of accident. We find no error in defendant’s conviction for assault with a dangerous weapon inflicting serious bodily injury. A juror (Juror 7) brought a replica gun to the courthouse with the intention to use the device as a visual aid during deliberations. The replica gun was confiscated at the security station and was not shown to any other jurors. During a lengthy colloquy with the trial judge, Juror 7 denied having done any independent research, said he had owned the replica for years and had not purchased it for any reasons related to the case, and affirmed that he could comply with the judge’s instructions and serve as an impartial and fair juror in the case. The trial court found that Juror 7 could remain and allowed him to return to the jury room for continued deliberations. Although defendant argues on appeal that the trial court should have granted a mistrial, since he failed to object or move for a mistrial—or assert on appeal that the trial court’s decision is subject to plain-error review—defendant has waived review of this issue. State v. Capps (Lawyers Weekly No. 012-312-21, 9 pp.) (John Arrowood, J.) Appealed from Orange County Superior Court (Allen Baddour, J.) Shawn Maier for the state; Michael Casterline for defendant. 2021-NCCOA-510

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Criminal Practice DWI – Appeals – Attorney’s Fee – Civil Judgment Defendant was convicted of driving while impaired, but his appeal concerns only the civil judgment entered against him for attorney’s fees. Defendant failed to provide timely written notice of appeal, and his petition for writ of certiorari fails to demonstrate that his appeal is meritorious. We deny the petition and dismiss defendant’s appeal for want of jurisdiction. State v. Myers (Lawyers Weekly No. 012-313-21, 2 pp.) (Lucy Inman, J.) Appealed from Rutherford County Superior Court (Marvin Pope, J.) James Baker for the state; Guy Loranger for defendant. 2021-NCCOA-516

Criminal Practice Possession of a Firearm by a Felon – Attorney’s Fees – Civil Judgment – Belated Petition After his convictions for possession of a firearm by a felon and attaining habitual felon status, defendant told the trial court that he agreed that his appointed attorney had spent between 130 and 140 hours on his case. Although the trial court instructed the clerk to place a civil lien against defendant for no more than $10,000, trial counsel subsequently submitted an expense form requesting fees and expenses of $11,118, and the trial court entered a civil judgment against defendant for $11,118 plus a $60 attorney appointment fee. Not only did defendant fail to file timely notice of appeal from the civil judgment, but he also waited almost two years to file a petition for writ of certiorari seeking review of the civil judgment. Given defendant’s lack of diligence, we deny his petition and dismiss his appeal. State v. Fleming (Lawyers Weekly No. 012-314-21, 4 pp.) (Chris Dillon, J.) Appealed from Mecklenburg County Superior Court (Eric Levinson, J.) Katherine Murphy for the state; Guy Loranger for defendant. 2021-NCCOA-512

Criminal Practice Second-Degree Murder – Malice – Sentencing – N.J. Conviction The state’s evidence showed that the victim, a customer in a convenience store, witnessed a fight between defendant and a woman and told the woman not to leave the store with defendant. Defendant stuck the victim in the head, causing his death from a severe closed-head injury, skull fractures and bleeding in the brain. Since malice is presumed when a defendant intentionally assaults another with a deadly weapon, thereby causing the other’s death, and since bodily appendages such as a defendant’s hands may constitute a deadly weapon, the trial court properly instructed the jury on second-degree murder. We find no error in defendant’s conviction for second-degree murder or in the trial court’s computation of his prior record level for sentencing purposes. In response to the state’s presentation of a certified copy of a judgment previously entered against defendant in New Jersey for unlawfully possessing a handgun (a seconddegree felony in that jurisdiction), defense counsel merely argued that the New Jersey conviction “appears” to be equivalent to a misdemeanor in North Carolina. Because defendant failed to present any evidence, much less prove by the preponderance of the evidence, that the offense classified as a felony in New Jersey was substantially similar to an offense that is a misdemeanor in North Carolina, the trial court did not err by counting the New Jersey conviction as a felony in North Carolina.

State v. Sanders (Lawyers Weekly No. 012-315-21, 9 pp.) (John Arrowood, J.) Appealed from New Hanover County Superior Court (Henry Stevens, J.) Melissa Taylor for the state; Joseph Lattimore for defendant. 2021-NCCOA-518

Criminal Practice Probation Revocation – Absconding – Failure to Report Under the Justice Reinvestment Act of 2011, probation may not be revoked for a simple “failure to report” violation; however, probation may be revoked for “absconding”: willfully avoiding supervision or willfully making the defendant’s whereabouts unknown to the supervising probation officer. G.S. § 15A-1343(b) (3a). From 15 July to 21 July 2020, defendant missed one scheduled meeting with her probation officer (Officer Anthony), she failed to respond to at least three calls from Officer Anthony, she failed to respond to at least three text messages from Officer Anthony, she failed to respond to three calls and voicemails placed to her mother and a friend, and she failed to appear at a court hearing. Further, on 15 July 2020, defendant told Officer Anthony she would be staying at her mother’s house until August; however, on 22 July 2020, defendant’s mother informed Officer Anthony that defendant did not live there and she had not seen defendant “for weeks.” Based on this evidence, the trial court did not abuse its discretion by revoking defendant’s probation for absconding. We affirm the revocation of defendant’s probation. We remand for the correction of clerical errors. State v. Woolard (Lawyers Weekly No. 012-316-21, 15 pp.) (Darren Jackson, J.) Appealed from Beaufort County Superior Court (Alma Hinton, J.) Alan McInnes for the state; Benjamin Kull for defendant. 2021-NCCOA-520

Criminal Practice Miranda Rights – Poor Quality Audio – Invocation of Right to Counsel Although defendant’s custodial interrogation was recorded, at the 21:10:06 mark on the recording, defendant’s statement was unintelligible, and the interviewing detective said all he could make out in the statement was the word “attorney.” Given defendant’s argument that he unambiguously invoked his right to counsel and the state’s argument that he did not, when the trial court was deciding defendant’s motion to suppress his statements to the police, the court should have resolved the conflict in the evidence. We remand for further proceedings. The trial court found that it was unclear what defendant said, and the court summarized the detective’s testimony that he could only make out the word “attorney.” These findings were insufficient to resolve the material conflict in the evidence. In addition, the trial court found that “there was no evidence presented by the defense in the motion to suppress to explain what the Defendant stated to [Detective] Barbour.” This finding suggests that perhaps the trial court acted under the misapprehension that defendant bore the burden of proof at this stage of the suppression hearing. To the contrary, at a hearing to resolve a defendant’s motion to suppress, the state carries the burden to prove by a preponderance of the evidence that the challenged evidence is admissible.Remanded. State v. Kwiagaye (Lawyers Weekly No. 012-317-21, 13 pp.) (Valerie Zachary, J.) Appealed from Mecklenburg County Superior Court (George Cooper Bell, J.) Scott Beaver for the state; Kirby Smith for defendant. 2021-NCCOA-513