Conference of NC Superior Court Judges Recent Decisions

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Conference of NCSuperior Court JudgesRecent
Decisions

• Don Cowan
• Smith Moore LLP
• 16 June 2006

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LIABILITY
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Motor Vehicles
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Osetek v. Jeremiah(NC 2006) (1)
Issue When the plaintiff introduced medical
bills totaling 15,554.30, whether the trial
court should have instructed the jury as to the
mandatory presumption on the issue of medical
damages in N.C.G.S. 8-58.1?
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FACTS

• The plaintiff was stopped at a stop sign when she
  was struck in the rear by the defendants
  vehicle.
• The plaintiff introduced evidence of medical
  bills totaling 15,554.30. The plaintiffs
  treating chiropractor testified about the
  plaintiffs injuries.
• The trial court granted the plaintiffs motion
  for a directed verdict on the issue of
  contributory negligence.
• The jury found the defendant negligent and
  awarded the plaintiff 600.

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HELD Affirmed

• G.S. 8-58.1 does create a rebuttable mandatory
  presumption as to the reasonableness of medical
  expenses.
• The parties did not stipulate to the plaintiffs
  medical expenses, therefore, this was an issue
  for the jury to decide.
• The defendants rebuttal evidence questioned the
  relationship between the medical expenses and the
  accident.
• The trial judge properly refused to give the
  mandatory presumption on the issue of medical
  damages.

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Hofecker v. Casperson (NC 2005) (2)

• Issues
• When the defendants vehicle struck the plaintiff
  as the plaintiff was walking along the highway at
  night and the defendant testified that the
  plaintiff was wearing dark clothing and came out
  of nowhere and walked directly into the path of
  my car, whether the trial court properly granted
  the defendants motion for summary judgment on
  the issue of contributory negligence?
• 2. When the evidence indicated that the
  plaintiff was struck while located in the
  roadway, whether this fact without additional
  evidence that the defendant was negligent in the
  operation of his vehicle or could have avoided
  the accident is sufficient to defeat the
  defendants motion for summary judgment on the
  issue of last clear chance?

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FACTS

• The plaintiff was walking home from work on
  1 November 2001 at about 655 p.m. and was
  wearing dark clothes. There were no street
  lights in the area.
• The defendant testified that he caught a
  glimpse of the plaintiff and that the plaintiff
  came out of nowhere, walked directly into the
  path of my car.
• The trial court granted the defendants motion
  for summary judgment on contributory negligence
  and last clear chance.

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HELD Affirmed

• The evidence was clear that the plaintiff was
  walking on the highway with his back to traffic.
• The accident happened on an unlighted road and
  the plaintiff was wearing dark clothing.
• At the plaintiffs deposition, he admitted that
  he would not have seen the headlights on the
  defendants vehicle because they were coming
  behind you.
• Since the defendant first saw the plaintiff when
  the plaintiff was in front of the defendants car
  and the defendant had no opportunity to avoid
  hitting the plaintiff, the plaintiff was
  contributorily negligent as a matter of law.

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HELD Affirmed (Contd.)

1. The plaintiffs evidence opposing summary
   judgment did not forecast any facts showing that
   the defendant was negligent in the operation of
   his vehicle, such as speeding, not keeping a
   proper lookout or should have seen the plaintiff.
   Even if the plaintiff was struck while in the
   road, this is not sufficient to deny the
   defendants motion for summary judgment on last
   clear chance.

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Ligon v. Matthew Allen Strickland (NC App 2006)
(4)

• Issues
• When the plaintiff testified that he was walking
  along the side of the road when he was struck by
  the defendants vehicle, but the plaintiffs
  evidence also included testimony by the
  investigating highway patrolman that the
  plaintiff was in the road at the time he was
  struck, whether the trial court should have
  submitted the issue of contributory negligence to
  the jury?
• When the defendant testified that he swerved in
  the road to avoid hitting an animal, whether an
  instruction of sudden emergency should have been
  given, and, if so, whether the sudden emergency
  instruction should state that the doctrine
  applies when the driver is confronted with
  imminent danger to himself or others?

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FACTS

• The plaintiff alleged that he was walking along
  the side of the road at night when he was struck
  by the defendants vehicle.
• The plaintiff was wearing dark clothing. He
  testified that he heard a whoosh, then recalled
  nothing until he woke up in the hospital.
• Before the accident, the plaintiff had been to a
  ball game and drank a bottle of beer. His blood
  alcohol level at the hospital was .08.

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FACTS (Contd.)

• The defendant testified that he saw an animal in
  the road. When he swerved to avoid the animal,
  he went off the road and struck a fence. The
  defendant continued driving. When he arrived at
  home and told his father what had happened, the
  defendant and his father returned to the scene of
  the accident and saw the plaintiff in the fence.
• The plaintiff told the investigating highway
  patrolman that he was in the roadway at the
  time he was hit.
• The trial court refused the defendants request
  to instruct on contributory negligence.

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HELD Reversed and new trial ordered

• The trial court should have instructed on
  contributory negligence. Although the plaintiff
  denied that he was in the road at the time he was
  hit, the plaintiff called the highway patrolman
  as a witness and relied on his testimony to
  establish the defendants negligence.
• The jury should have had the opportunity to
  determine whether the plaintiff was in the road
  at the time he was hit. When combined with the
  plaintiffs intoxication and the fact that he was
  wearing dark clothes while walking along the road
  at night, contributory negligence was for the
  jury.
• The trial judge modified the sudden emergency
  instruction, N.C.P.I. Div. 101.15 to state that
  it did not apply if only a non-human animal is
  in danger. At the time of the new trial, the
  instruction should focus on whether the driver
  was suddenly and unexpectedly confronted with
  imminent danger to himself or others.

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Croom v. Humphrey(NC App 2006) (6)
Held When N.C.G.S. 20-150(d) prohibits
crossing the centerline of a highway at a curve
and the defendants lane was marked with a broken
yellow line, the defendant was permitted to pass
if he could do so safely. Centerline as used
in the statutes means a solid yellow line,
which indicates that passing from the adjacent
lane is forbidden.
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Oakes v. Wooten (NC App 2005) (7)

• Issues
• Even though the plaintiff had the green light
  when entering the intersection, whether the trial
  court should have instructed on contributory
  negligence based on failure to keep a proper
  lookout and failure to exercise reasonable care?
• Whether the trial court properly sanctioned the
  defendant for failing to admit the defendants
  motor vehicle violations, agency and that the
  defendants negligence was the sole proximate
  cause of the plaintiffs injuries?

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FACTS

• The plaintiff testified that he exited I-85 onto
  south Main Street in Graham and entered the
  intersection on a green light.
• The defendant testified that she failed to stop
  for the red light and collided with the
  plaintiffs car.
• Based on the plaintiffs testimony that he
  surveyed the intersection before entering it
  and did not see the defendant, the trial court
  refused to instruct on contributory negligence.
• The jury awarded the plaintiff 119,000.

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HELD

• The trial judge properly refused to instruct on
  contributory negligence.
• Taking the evidence in the light most favorable
  to the defendant, the evidence fails to show that
  the plaintiff could have done anything to avoid
  the accident or that there was anything to put
  the plaintiff on notice that the defendant would
  fail to stop at the red light.
•   The defendant testified that she was not
  traveling at a high rate of speed and did not
  enter the intersection until the plaintiff had
  turned in front of her.

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HELD (Contd.)

• The trial court abused its discretion in
  sanctioning the defendant.
• At the time the plaintiff submitted the requests
  to admit, discovery had not begun.
• The defendant had no facts upon which to
  consider the requests to admit relating to the
  plaintiffs injuries and contributory negligence.
• At the time of the defendants response,
  reasonable grounds existed to believe that they
  might prevail on some matters denied.

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Premises
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Herring v. Food Lion, L.L.C.(NC 2006) (10)
Issue When plaintiff injured his knee on a
stock cart at defendants store, but presented no
evidence as to who placed the cart in its
position, how long it had been in that position
and if the defendant knew or should have known of
its position, whether the trial court properly
granted the defendants motion for a directed
verdict?
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FACTS

• The plaintiff was pushing a shopping cart at the
  defendants store. The plaintiff stopped at the
  meat counter and walked to a soft drink display.
• After picking up a bottle, the plaintiff turned
  to walk back to his shopping cart.
• The plaintiffs knee struck a stock cart. The
  plaintiff testified that he did not see the cart
  and that it was hidden.
• The stock cart was lower than the plaintiffs
  knee.
• The plaintiff left the store without reporting
  the injury.
• The trial court granted the defendants motion
  for a directed verdict.

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HELD Affirmed

1. On the issue of negligence, the plaintiff
   produced no evidence concerning who placed the
   cart in its position, when it was placed there or
   how long it remained in that position.
2. Vendors at the store had access to the stock
   cart.
3. There was also no evidence as to how long the
   stock cart had been in the position and whether
   the defendant knew or should have known of its
   position.

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Grayson v. High Point Development(NC App 2006)
(11)
Issue When it had snowed for two days at
plaintiffs place of employment and plaintiff
knew that the parking lot where her car was
parked was covered with ice, whether the owner of
the parking lot had a duty to warn the plaintiff
of the hazardous conditions at the parking lot?
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FACTS

• The plaintiff was employed at Belks at the Oak
  Hollow Mall in High Point.
• A heavy snow had fallen on 25 and 26 January
  2004.
• As the plaintiff left work and was walking to her
  car in the parking lot, she slipped on ice and
  fell.
• At her deposition, the plaintiff testified that
  she knew the condition of the parking lot and had
  told another employee that somebodys going to
  get killed out there.
• The trial court granted the defendants motion
  for summary judgment.

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HELD Affirmed

• There is no duty to warn the plaintiff of
  conditions of which she was aware and of which
  she had superior knowledge to the defendant.
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• A landowner is under no duty to protect a
  visitor against dangers either known or so
  obvious and apparent that they reasonably may be
  expected to be discovered.

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Bailey v. Handee Hugos Inc. (NC App 2005) (12)
Issue When the adjuster for the defendants
liability insurance company misrepresented the
identity of the owner of the premises where the
plaintiff fell, but the identity of the owner
could have been found in the records of the
Register of Deeds, whether the trial court
properly dismissed the action for failure to name
the correct defendant?
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FACTS

• The plaintiff fell and was injured at Handee
  Hugos on 18 April 2001.
• The plaintiff was contacted by an adjuster for
  Federated Mutual Insurance Company and told that
  the Federated insureds were Handee Hugos and
  Sampson-Bladen, the operator of the store.
• Suit was filed on 29 March 2004 against Handee
  Hugos and Sampson-Bladen.

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FACTS (Contd.)

• The defendant filed a motion to dismiss on the
  grounds that the store was leased and operated by
  United Energy.
• On 19 July 2004, the plaintiff filed a motion to
  amend to add United Energy as an additional
  defendant.
• The trial court denied the plaintiffs motion to
  amend and allowed the defendants motion to
  dismiss.

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HELD Affirmed

1. Hatcher v. Flockhart Foods (NC App 2003) and
   equitable estoppel did not apply.
2. In Hatcher, there was active misrepresentation
   as to the insured and there was no public record
   as to the responsible party.
3. In the present case, a search of the Register of
   Deeds would have identified the owner of the
   store.
4. Although the Court of Appeals found the
   misrepresentation reprehensible, dismissal was
   affirmed.

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Wallen v. Riverside Sports Center(NC App 2005)
(13)
Issue Whether defendants/landowners had a
duty to exercise reasonable care concerning trees
on their property that was next to a navigable
river?
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FACTS

• Defendants owned boat ramp on the Cape Fear
  River.
• Plaintiff was in a boat and using the boat ramp
  to get off the river as a storm approached.
• While the plaintiff was waiting at the boat ramp,
  a tree fell on the plaintiff causing injuries
  that rendered the plaintiff a paraplegic.
• The plaintiffs expert testified that the tree
  that fell was extensively decayed and showed
  evidence of the decay through many dead branches.
• The trial court granted the defendants motion
  for summary judgment.

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HELD Summary judgment reversed.

1. The defendants had a duty to exercise reasonable
   care concerning natural conditions such as trees
   on their land.
2. The defendants were liable only if they had
   actual or constructive notice of a dangerous
   natural condition existing upon their land.
3. The tree that fell on the plaintiff had broken
   off once before the date of the plaintiffs
   injury and showed signs of decay.
4. There was a genuine issue of material fact on the
   issue of the defendants negligence.

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Freeman v. Food Lion(NC App 2005) (15)

• Issues
• Whether Food Lion/owner of store had duty to warn
  the plaintiff of hidden dangers?
• Whether the plaintiffs failure to plead that the
  individual defendant was the agent or employee of
  the corporate defendants barred the plaintiff
  from making this argument on appeal?

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FACTS

• The plaintiff was shopping at the Food Lion store
  when she was struck by a buffing machine operated
  by Robinson who was wearing ear phones.
• Robinson had previously knocked down orange cones
  at the front of the store.
• The plaintiff sued Food Lion, Budget Services
  (the company contracting with Food Lion to
  maintain the floors), Franks Floor Care (the
  company contracting with Budget Services to
  maintain the floors) and Amron Janitorial (the
  employer of Robinson).
• The trial court granted the motions for summary
  judgment of all defendants.

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HELD Summary judgment reversed as to Food Lion
affirmed as to all other defendants.

• As to the plaintiffs argument on appeal that
  Robinson was the agent or employee of the
  defendants, this relationship had not been
  pleaded in the complaint. The plaintiff may not
  make a different legal argument on appeal that
  was not made in the pleadings or before the trial
  court.
• Since neither Budget Services nor Franks Floor
  Care owned or operated the store, they had no
  duty to the plaintiff and may not be held liable
  under a theory of premises liability.

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HELD Summary judgment reversed as to Food Lion
affirmed as to all other defendants. (Contd.)

1. As owner of the store, Food Lion had a duty to
   keep the premises safe and warn the plaintiff of
   hidden dangers. There were genuine issues of
   material fact as to whether (a) Food Lion
   warned the plaintiff of the buffing (b) Food
   Lion used ordinary care in providing safe
   premises (c) the buffing machine presented an
   obvious danger and (d) a reasonably prudent
   person should have noticed the buffing machine
   and avoided the collision.

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Employment
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Little v. Omega Meats I, Inc.(NC 2005) (17)
Issue Whether defendant is liable for
assault committed by independent contractor of
defendant?
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FACTS

• Omega Meats sold meat products through
  independent contractor salesmen.
• The salesmen rented refrigerator trucks and
  attempted to sell the meat door to door.
• Omega did not supervise the salesmen and did not
  identify areas for meat to be sold.
• Smith, an independent contractor salesman, had
  been convicted of robbery and kidnapping. He
  served a prison sentence for these crimes. Omega
  did not conduct a background check on Smith
  before he was employed.

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FACTS (Contd.)

• Smith parked his refrigeration truck in the
  driveway next to the plaintiffs house. He broke
  into the plaintiffs house and assaulted the
  plaintiffs.
• The trial court granted Omegas motion for a
  directed verdict at the close of the plaintiffs
  evidence.

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HELD Affirmed.

1. Omega owned no duty to the plaintiffs.
2. Smith was not in the plaintiffs home as a result
   of any activities on behalf of Omega.
3. Employers do not owe a legal duty to victims of
   their independent contractors intentional torts
   that bear no relationship to the employment.
4. Even if Omega were negligent in hiring Smith,
   Smiths employment did not advance his criminal
   endeavor in any manner. The result would have
   been the same if Smith had not been driving an
   Omega truck.

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INSURANCE
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Motor Vehicle
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Hernandez v. Nationwide Mutual Ins. Co., (NC
App 2005), review denied (20)
Issue When Nationwides insured was driving
a car she was purchasing, but title to the car
had not been transferred to the insured, whether
the car was a non-owned vehicle that was not
furnished for the regular use of the insured,
and, therefore, the vehicle was insured?
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FACTS

• Ms. Norris, the Nationwide insured, was in the
  process of purchasing a 1997 Blazer, when she was
  involved in an automobile accident with the
  plaintiff.
• All paperwork for the purchase of the Blazer had
  been completed, but title to the Blazer had not
  been transferred to the insured.
• The trial court granted the plaintiffs motion
  for summary judgment finding that Nationwide had
  coverage.

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HELD Affirmed.

1. Under G.S. 20-72(b), all cars which are not
   owned are insured except those furnished for the
   regular use of the insured or his relative.
2. Because at the time of the accident, the Blazer
   was not furnished for the insureds regular use
   and title had not been transferred, the
   Nationwide exclusion did not apply. There was
   coverage for the accident.

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McGuire v. Draughon(NC App 2005) (22)
Issue When the defendant drove a Ford
Explorer two or three times a week that was owned
by her mother-in-law, whether the Explorer was
furnished for the regular use of the defendant,
and, therefore, there was no coverage?
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FACTS

• At the time of the accident, Mollie Draughon was
  operating her mother-in-laws Ford Explorer.
• Mollie Draughon and her husband lived next door
  to Betty Draughon. The Explorer was always
  parked in the common driveway between the two
  houses. Mollie and her husband had 3 keys to the
  Explorer and did not have to ask for permission
  to use it.
• Mollie Draughon testified that she drove the
  Explorer two or three times a week to run
  errands, go to work and take Betty Draughon to
  places she needed to go.

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FACTS (Contd.)

• Mollie Draughon and her husband were insured by
  Farm Bureau. The Farm Bureau policy excluded
  coverage for vehicles furnished for the insureds
  regular use.
• The trial court granted Farm Bureaus motion for
  summary judgment finding no coverage.

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HELD Affirmed.

1. Factors to be considered in determining whether a
   vehicle is furnished for the regular use of the
   insured are (1) availability of the vehicle to
   the insured and (2) frequency of use by the
   insured.
2. Where an insured driver has the unrestricted use
   and possession of an automobile, the certificate
   of title for which is retained by another, the
   car is furnished for the regular use of the
   insured driver.
3. Mollie Daughons use of the Explorer was
   consistent as well as continuing.
4. Regular use does not require daily use.

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Underinsured/Uninsured
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Sawyers v. Farm Bureau Ins.(NC 2005) (24)
Issue When the plaintiff was involved in a
motor vehicle accident in Florida with an
uninsured motorist and brought suit in Florida
against the uninsured motorist and the
plaintiffs uninsured carrier, but the carrier
was dismissed from the Florida action for lack of
jurisdiction, whether the carrier was bound in a
suit in North Carolina by the Florida judgment
against the uninsured motorist under N.C.G.S.
20-279.21(b)(3) because the uninsured carrier had
been served with a copy of the summons and
complaint in the Florida action?
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FACTS

• The plaintiff was a passenger in a car involved
  in an automobile accident in Florida on 10 August
  1996.
• The driver of the other vehicle was uninsured.
• The plaintiff was covered by an uninsurance
  policy with Farm Bureau.
• Suit was brought in Florida against the uninsured
  driver and Farm Bureau. Service on Farm Bureau
  was through the North Carolina Commissioner of
  Insurance.
• Farm Bureau was dismissed from the Florida suit
  for lack of jurisdiction.

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FACTS (Contd.)

• Judgment was entered in Florida for the plaintiff
  against the uninsured motorist for 200,000.
• The present suit against Farm Bureau was to
  enforce the Florida judgment under N.C.G.S.
  20-279.21(b)(3) providing that the insurer shall
  be bound by a final judgment if the insurer had
  been served with a copy of the summons and
  complaint.
• The trial court granted Farm Bureaus motion for
  summary judgment.
• The Court of Appeals reversed on the grounds that
  Farm Bureau had been served in the Florida action
  and was bound by the judgment.

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HELD Trial court affirmed

1. Since Farm Bureau was dismissed from the Florida
   action for lack of jurisdiction, Farm Bureau was
   never a party in the Florida lawsuit.
2. In order for N.C.G.S. 20-279.21(b)(3) to apply,
   Farm Bureau would have to have been a party to
   the Florida action.
3. The mere providing of notice of the action is
   not sufficient for Farm Bureau to be bound.
4. Based also on lack of jurisdiction over Farm
   Bureau in Florida, the action was also barred by
   the three-year statute of limitations since the
   accident occurred on 10 August 1996 and suit was
   not brought in North Carolina against Farm Bureau
   until 11 April 2002.

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Life
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Duncan v. CUNA Mutual Ins. Society(NC App 2005)
(27)

• Issues
• Whether the toxicity findings in an autopsy
  report were sufficient to exclude coverage under
  a life insurance policy that provided an
  exclusion for voluntary use of a drug except as
  prescribed by a physician?
• Whether affidavit relying on hearsay,
  non-first-hand facts was sufficient to deny
  summary judgment?

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FACTS

• Decedent was insured under life insurance policy
  with CUNA that excluded coverage for voluntary
  use of any drug . . . except as prescribed by a
  physician.
• The decedent was found in his living room. The
  autopsy report indicated that the cause of death
  was methadone toxicity.

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FACTS (Contd.)

• In opposition to CUNAs motion for summary
  judgment, the decedents estate presented the
  affidavit of a substance abuse counselor stating
  that the decedent had been counseled for alcohol
  and substance abuse. The affidavit did not
  contain first-hand information about the
  decedents use of methadone.
• The trial court granted CUNAs motion for summary
  judgment.

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HELD Affirmed.

• The autopsy report established that the cause of
  death was methadone toxicity. When CUNA
  presented the autopsy report, the burden shifted
  to the decedent to demonstrate an issue of fact
  concerning the use of the drug being prescribed
  by a doctor.
• The counselors affidavit was not sufficient to
  defeat summary judgment because it was not based
  on first-hand information.

The affidavit did not meet the requirements of
Rule 701 because it was based on hearsay and
offered opinions that were not of an expert.
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Exclusion for Intentional Acts
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Allstate v. Lahoud(NC 2005) (29)

• Issues
• When insured pleaded guilty to charge of taking
  indecent liberties with a minor, whether plea
  established that coverage was excluded under
  policy provision excluding coverage for any
  intentionally harmful act of the insured?
• Whether insureds affidavit contending that his
  conduct was unintentional or negligent was
  sufficient to deny summary judgment to Allstate?

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FACTS

• Insured was charged with taking indecent
  liberties with a nine-year old.
• The State allowed the insured to plead guilty in
  exchange for a suspended sentence, an apology and
  payments of therapy bills for the child.
• The present declaratory judgment action arose
  when the child and his parents filed a civil
  action for sexual assault.

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FACTS (Contd.)

• The plaintiffs policy excluded coverage for any
  intentionally harmful act or omission of an
  insured.
• The trial court granted Allstates motion for
  summary judgment.

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HELD Affirmed.

• The insured pleaded guilty and apologized to the
  child and his family.
• The guilty plea established that the defendant
  had the intent to commit the act.
• A nonmovant may not generate a conflict simply
  by filing an affidavit contradicting his own
  sworn testimony where the only issue raised is
  credibility.
• The insured could defeat summary judgment on the
  issue of his intent by evidence other than his
  own affidavit or deposition contradicting his own
  testimony.

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Independent Insurance Adjusters
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Koch v. Bell, Lewis Associates, Inc.(NC App
2006) (31)
Issue Whether a third-party, non-insured may
sue an independent insurance adjuster for
negligence and unfair and deceptive trade
practices?
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FACTS

• The home of the plaintiffs had synthetic stucco
  applied by Quality Stucco Systems. When the
  plaintiffs discovered that the stucco was
  defective, a claim was filed against Quality.
• Quality was insured by Southern Guaranty
  Insurance.
• Bell, Lewis was the adjuster for Southern
  Guaranty.
• Bell, Lewis told the plaintiffs that Southern
  Guaranty would pay for the cost of repairs, but
  only if the repair work was done by Quality.

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FACTS (Contd.)

• The plaintiffs agreed. The plaintiffs were paid
  10,000 and signed a general release.
• The repair work by Quality was also defective.
• The plaintiffs sued Quality, Southern Guaranty
  and Bell, Lewis for negligence and unfair and
  deceptive trade practices.
• The trial court dismissed all claims against all
  defendants.

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HELD Affirmed

1. Independent adjusters owed no duty to the
   plaintiffs who were not the insureds of Southern
   Guaranty, therefore, there was no claim for
   negligence.
2. Since North Carolina does not recognize a cause
   of action for unfair and deceptive trade
   practices by a third-party against an insurance
   company of the adverse party, the claims for
   unfair and deceptive trade practices were
   properly dismissed.
3. The general release applied to all claims, past
   and future, arising from the acts of Quality,
   therefore, this was an additional reason
   supporting dismissal.

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Unfair and DeceptiveTrade Practices
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Page v. Lexington Ins. Co. (NC App 2006) (32)

• Issues
• Whether alleging violations of claims practices
  under N.C.G.S. 58-63-15(11) as grounds for a
  claim under N.C.G.S. 75-1.1 is sufficient to
  withstand a 12(b)(6) motion?
• When the claim under N.C.G.S. 75-1.1 is based
  on breach of the insurance contract and failure
  to handle the plaintiffs claim properly, whether
  the claim is governed by the four-year statute of
  limitations applicable to unfair and deceptive
  trade practice claims?

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FACTS

• An underground sewer line on the plaintiffs
  property ruptured on 21 February 2001 and caused
  property damage and personal injury to the
  plaintiffs.
• The plaintiffs filed a claim with the defendant.
  When the claim was not settled, suit was filed on
  28 July 2004 alleging breach of contract, bad
  faith and unfair and deceptive trade practices.
• The claim for unfair and deceptive trade
  practices listed violations of the claims
  procedures in N.C.G.S. 58-63-15(11).

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FACTS (Contd.)

• The trial court dismissed the claims for breach
  of contract and bad faith due to the three-year
  statute of limitations.
• The trial court dismissed the unfair and
  deceptive trade practices claims on two grounds
  (1) insufficient pleading of the Chapter 75
  claim and (2) the three-year statute of
  limitations applicable to the underlying facts
  rather than the four-year period for unfair and
  deceptive trade practices.

75
76
HELD Reversed

1. Alleging violations of the claims handling
   procedures in N.C.G.S. 58-63-15(11) is also a
   violation of N.C.G.S. 75-1.1 without showing
   frequency or general business practice.
2. The unfair and deceptive trade practices claim is
   different and separate from the breach of
   contract claims. The unfair and deceptive trade
   practices claim is governed by the four-year
   statute of limitations.

76
77
Attorney-Client Privilege
77
78
Nationwide Mutual Fire Ins. Co. v. Bourlon(NC
2005) (35)

• Issues
• When an insurance company retains an attorney for
  its insured, whether the attorney has an
  attorney-client relationship with the insurance
  company and the insured?
• Whether the attorney may have privileged
  communications with the insured about coverage to
  which the insurance company is not entitled to
  access?

78
79

• Issues (Contd.)
• Whether suit by the insured alleging bad faith
  and negligent representation by the attorney
  retained by the insurance company waives any
  privilege?
• Whether the attorney for the insurance company
  should turn over his complete file to the
  insurance company?

79
80
FACTS

• Nationwide insures Bourlon under homeowners
  policy with limits of 300,000.
• Axarlis sues Bourlon alleging that one of
  Bourlons dogs bit him. Claims alleged are
  malicious prosecution, abuse of the criminal
  process, and assault.
• Nationwide retains Lee Patterson to defend
  Bourlon.
• Nationwide tells Bourlon that policy excludes
  coverage for malicious prosecution and assault.

80
81
FACTS (Contd.)

• Jury awards Axarlis 321,000 in compensatory and
  punitive damages, including 150,000 in punitive
  damages for the malicious prosecution claim.
• Post-trial, Axarlis offers to settle for
  236,000. Nationwide will contribute 200,000 if
  Bourlon will pay 36,000. Bourlon refuses to
  contribute to settlement.
• Nationwide settles the covered claims with
  Axarlis. Axarlis and Bourlon reach a separate
  settlement of the malicious prosecution claim.

81
82
FACTS (Contd.)

• Bourlon requests a copy of his file from
  Patterson.
• Nationwide files the present declaratory judgment
  claim for a determination that it has no coverage
  for the malicious prosecution claim settlement.
• Bourlon counterclaims for bad faith, refusal to
  settle, and unfair and deceptive trade practices.
• Trial court rules that Nationwide did not have
  coverage for the malicious prosecution claim.

82
83
FACTS (Contd.)

• Nationwide deposes Bourlon on the remaining
  claims. During Bourlons deposition, his counsel
  instructs him not to answer questions concerning
  his communications with Patterson.
• Trial court rules (1) no attorney-client
  relationship between Patterson and Nationwide
  (2) there is attorney-client relationship between
  Patterson and Bourlon and (3) Patterson breached
  the attorney-client relationship with Bourlon by
  giving his file to Nationwide.

83
84
HELD

1. There was a tripartite attorney-client
   relationship in which Patterson represented
   Bourlon and Nationwide.
2. Any communications between Patterson and Bourlon
   relating to the defense for which the insurer
   has retained the attorney are not privileged
   under the common interest doctrine.
   Communications between Bourlon and Patterson
   about the malicious prosecution claim would be
   privileged (such that Nationwide would not be
   privy to any communications).

84
85
HELD (Contd.)

• Any communications between Bourlon and Patterson
  that did not relate to the underlying action are
  privileged. Communications that relate to the
  issue of coverage are not discoverable because
  the interests of the insurer and the insured with
  respect to the issue of coverage are always
  adverse.
• Bourlon, however, waived this privilege by
  allegations of bad faith and negligent
  representation by Patterson.
• Because there may have been communications in
  Pattersons file that were privileged as to
  Nationwide, Patterson should have submitted his
  file to the trial court in camera for the trial
  judge to determine whether there were privileged
  documents in the file.

85
86
Commercial General Liability
86
87
Bond/Tec, Inc. v. Scottsdale Ins. Co.(NC App
2005) (40)
Issue When defendant insurance company
relies on policy provision excluding coverage if
the insured voluntarily agrees to make payment,
whether the insurer is also required to show
prejudice from the actions of the insured?
87
88
FACTS

• The plaintiff entered into a roofing contract
  with the Newton-Conover Schools.
• As a result of the failure of temporary roofing,
  rain leaked into one of the schools and caused
  damage.
• The president of the plaintiff told the school
  system that he would pay for the damage out of
  his own pocket.
• The defendant denied liability based on the
  policy provision that No insured will, except at
  that insureds own cost, voluntarily make a
  payment, assume any obligations, or incur any
  expense, . . . without our consent.
• The trial court granted the defendants motion
  for summary judgment.

88
89
HELD Reversed

1. As a matter of first impression, the insurer is
   required to show prejudice before relying on the
   voluntary payments exclusion.
2. The prejudice requirement must relate to the
   ability to investigate or defend the claim.

89
90
PRACTICE AND PROCEDURE
90
91
Jurisdiction
91
92
Charter Medical, Ltd. v. Zigmed(NC App 2005)
(41)
Issue When defendant entered into contract
with North Carolina resident and the contract
initially provided for manufacture, shipment and
installation of the defendants product at the
plaintiffs facility in New Jersey, with shipment
subsequently changed to occur in North Carolina,
whether the act of entering the contract with the
North Carolina resident was sufficient to
establish the minimum contacts needed for due
process?
92
93
FACTS

• The plaintiff sent the defendant a proposal for
  purchase and shipment of a blood bag
  manufacturing machine to the plaintiffs North
  Carolina office.
• The plaintiff modified the proposal and agreed
  that the machine would be installed in New
  Jersey.
• The parties later agreed that the machine would
  be shipped to the plaintiffs facility in North
  Carolina. Four technicians employed by the
  defendant installed the machine in North
  Carolina.
• Although the trial court found jurisdiction under
  the long-arm statute, N.C.G.S. 1-75.4(5)(e),
  the trial court dismissed the action because the
  defendant did not have minimum contacts to
  satisfy due process.

93
94
HELD Affirmed

1. The mere act of entering a contract with a forum
   resident does not provide the necessary contacts
   when all elements of the defendants performance
   are to occur outside the forum.
2. The defendant did not attempt to benefit by
   entering the market in North Carolina.
3. Although part of the plaintiffs damages related
   to installation of the machine in North Carolina,
   most of the plaintiffs damages arose from
   allegations that the machine was defective when
   shipped from New Jersey.

94
95
Havey v. Valentine(NC App 2005) (43)
HELD

• The defendants passive website containing
  general information about the company but not
  allowing purchases and not specifically
  targeting North Carolina residents did not
  subject the defendant to personal jurisdiction in
  North Carolina.

95
96
Banc of America Securities, LLC v.Evergreen
International Aviation, Inc.(NC App 2005) (45)
HELD

1. Appellate review of issues involving personal
   jurisdiction are limited to whether the findings
   of fact by the trial court are supported by
   competent evidence in the record.
2. The trial court is not required to make findings
   of fact.
3. If the trial court does not make findings of
   fact, the appellate court must assume that the
   trial judge made factual findings sufficient to
   support the decision in favor of the plaintiff.

96
97
Statutes and Periodsof Limitation and Repose
97
98
Whittaker v. Todd (NC App 2006) (47)

• Issues
• When the defendant guaranteed his work for as
  long as you own the home, whether the
  plaintiffs action for property damage was barred
  by the six-year statute of repose?
• In order for the defendant to obtain dismissal
  based on the six-year period of repose, whether
  the defendant is required to plead the period of
  repose as an affirmative defense?

98
99
FACTS

• The plaintiff contracted with the defendant in
  1991 to replace the roof on the plaintiffs
  house.
• The defendant guaranteed the work for as long as
  you own the home.
• The plaintiff noticed in 2003 that part of the
  roof had not been sealed and that water damage
  had caused part of the roof to rot.
• Suit was filed on 11 November 2003 in small
  claims court.
• After the defendants appeal to district court,
  the district court granted the defendants motion
  to dismiss based on the six-year period of repose
  in G.S. 1-50(a)(5).

99
100
HELD Affirmed

1. Since the suit was for money damages and not
   breach of warranty, the defendants guarantee
   did not apply and the six-year period of repose
   applied.
2. Complying with the period of repose is a
   condition precedent to the right to file the
   claim, therefore, the plaintiff was required to
   establish compliance with G.S. 1-50(a)(5). The
   defendant was not required to plead the period of
   repose as an affirmative defense.

100
101
Jack H. Winslow Farms, Inc. v. Dedmon, (NC App
2005), review denied (48)
HELD

• Fraud is an exception to the running of the real
  property statute of repose in G.S. 1-50(a)
  (5)e. Fraud is not an exception to the running
  of the products liability statute of repose in
  G.S. 1-50(a) (6).

101
102
Res Judicata andCollateral Estoppel
102
103
Nicholson v. Jackson County School Bd.(NC App
2005) (53)

• Issues
• When plaintiff has notice of hearing on a motion,
  appears at the hearing and does not object,
  whether the plaintiff waives any defects in the
  notice of the hearing?
• When plaintiff fails to appeal a prior superior
  court order finding that the plaintiff did not
  request a hearing on the issue of his discharge
  within the statutory period, whether the present
  action for breach of contract relating to the
  plaintiffs discharge was barred by res judicata
  and collateral estoppel?

103
104
FACTS

• Plaintiff alleged that he was wrongfully
  terminated as principal and denied a hearing as
  required by statute.
• The school board conducted a hearing, then
  informed the plaintiff that he would be
  terminated unless he requested a hearing within
  14 days.
• The plaintiff did request a hearing, but it was
  after the 14-day period had expired.
• On appeal to the superior court, the trial judge
  denied the plaintiffs motion to remand for a
  hearing before the school board. The plaintiff
  did not appeal this order.

104
105
FACTS (Contd.)

• The present suit was filed in district court for
  breach of contract, wrongful termination and
  failure to follow proper administrative
  procedures.
• Because the relief requested was more than
  10,000, the defendant moved to transfer to
  superior court. The defendant also filed a
  motion to dismiss based on res judicata and
  collateral estoppel.
• The defendant gave notice of the hearing on the
  motion to dismiss at the same time as the motion
  to transfer was to be heard.
• The trial court granted the motion to transfer to
  superior court, then granted the motion to
  dismiss.

105
106
HELD Affirmed.

• When a party has notice of a hearing, then
  appears at and participates in the hearing
  without objection, that party waives any defects
  in the notice of the hearing and the right to
  request a continuance.
• The prior superior court order related to the
  same issues pending in the present suit,
  therefore, the present suit was barred.
• The focus of the prior superior court hearing
  was the plaintiffs termination by the board and
  his claim that he was denied a proper hearing.
  Because the present suit is based on the same
  contentions, it is barred by res judicata and
  collateral estoppel.

106
107
Pro Hac Vice Admission
107
108
In re Cole (NC App 2006) (55)

• Issues
• Whether the trial court abused its discretion in
  denying the motion to be admitted pro hac vice?
• Whether the trial court properly imposed
  sanctions for the plaintiffs failure to attend a
  noticed deposition when the defendants had not
  previously obtained an order compelling discovery
  under Rule 37(d)?

108
109
FACTS

• The plaintiffs retained Jones to represent them
  in relation to the foreclosure of their house in
  Elizabeth City.
• Jones was licensed to practice law in Virginia.
• Jones appeared before the Clerk and requested a
  continuance of the hearing because he had not
  been able to associate North Carolina counsel.
• The continuance was granted.

109
110
FACTS (Contd.)

• Jones then filed a complaint contesting the
  foreclosure and a motion to be admitted pro hac
  vice.
• A hearing on these motions was continued.
• Jones then moved for a preliminary injunction and
  also requested that the injunction and
  foreclosure motions be heard on 8 March 2004.
• The Clerk denied the motion to continue and
  ordered foreclosure.

110
111
FACTS (Contd.)

• Jones filed an appeal from the order and also
  filed a second action on behalf of the
  plaintiffs.
• The defendants noticed the depositions of the
  plaintiffs.
• Counsel for the defendants refused to allow the
  depositions to be continued.
• The plaintiffs did not appear at the times
  noticed for their depositions.

111
112
FACTS (Contd.)

• The defendants filed a motion for sanctions.
• The plaintiffs then filed a pro se complaint.
• The trial court denied Jones motion to be
  admitted.
• When the trial court denied the plaintiffs
  motion for a continuance, the plaintiffs took a
  voluntary dismissal without prejudice.
• The trial court also fined Jones 5,000 for the
  unauthorized practice of law and imposed
  sanctions against the plaintiffs for failure to
  appear at their depositions.

112
113
HELD Affirmed

• The trial judge did not abuse his discretion in
  denying Jones motion to be admitted pro hac
  vice.
• Jones had filed several motions and law suits
  and appeared before the Clerk without associating
  North Carolina counsel or being admitted to
  practice.
• An order directing compliance with discovery is
  not a prerequisite to sanctions under Rule
  37(d). The plaintiffs did not move for a
  protective order. The trial court did not abuse
  its discretion in imposing sanctions.

113
114
Service
114
115
Saliby v. Conners(NC App 2005) (59)
Issue Whether the affidavit of the
defendants father stating that he told the
deputy sheriff that the defendant did not live at
the residence where service was attempted was
sufficient to defeat the deputy sheriffs
affidavit of service under Rule 4(j)(1)(a)?
115
116
FACTS

• Suit was filed for injuries received in an
  automobile accident.
• The deputy sheriff served the summons and
  complaint on the defendants father at a
  residence in Wake County.
• Although the father accepted the summons and
  faxed it to his son in Texas, the fathers
  affidavit in support of the defendants motion to
  dismiss stated that the father told the deputy
  sheriff that his son had moved and accepted a new
  job in Texas.

116
117
FACTS

• The deputy sheriff filed a return indicating that
  service was completed.
• The trial court granted the defendants motion to
  dismiss.

117
118
HELD Reversed.

• The deputy sheriffs return of service indicates
  legal service under Rule 4(j)(1)(a), which
  results in a presumption of valid service of
  process.
• More than a single contradictory affidavit is
  required to show improper service.

118
119
Carpenter v. Agee(NC App 2005) (60)
Issue When the plaintiff filed an affidavit
of service by certified mail and a copy of the
signed return receipt, whether the defendants
affidavit stating that he had not resided at the
address shown in the plaintiffs affidavit since
2002 was sufficient to defeat service?
119
120
FACTS

• Suit was filed for injuries received in an
  automobile accident.
• The summons and complaint were sent by certified
  mail to the defendant at an address in San
  Bernadino, California.
• The return receipt was signed by the defendants
  mother at the address to which the summons and
  complaint were mailed.

120
121
FACTS (Contd.)

• The plaintiff filed an affidavit of service by
  certified mail and attached the signed return
  receipt.
• The defendant moved to dismiss and included his
  affidavit stating that he had not lived at the
  address since 2002.
• The trial court granted the defendants motion to
  dismiss.

121
122
HELD Reversed.

• By filing a copy of the signed return receipt,
  along with an affidavit that comports with
  N.C.Gen.Stat. 1-75.10, the plaintiff is
  entitled to a rebuttable presumption of valid
  service.
• Defendants single affidavit does not rebut the
  presumption.
• The affidavit merely states that the defendant
  did not reside at the address. The affidavit
  does not discuss whether his mother was
  authorized to accept service for him.

122
123
Rule 9(b) - Alleging Fraud
123
124
Bob Timberlake Collections, Inc. v. Edwards(NC
App 2006) (62)

• Held
• When the defendants counterclaim alleging fraud
  did not identify the representatives of the
  plaintiff conveying the false information and did
  not allege specifically where or when the
  statements were made, the trial court properly
  dismissed the counterclaim for fraud because they
  were not pleaded with the particularity required
  by Rule 9(b).
•  

124
125

• Held (Contd.)
• When the defendants counterclaim alleging unfair
  and deceptive trade practices stated only that
  the plaintiffs conduct constitutes unfair and
  deceptive trade practices and that such conduct
  involved commerce, the trial court properly
  dismissed the counterclaim because there was also
  no allegation that the conduct was immoral,
  oppressive, unscrupulous or substantially
  injurious to consumers and there was no
  allegation that the breach of contract was
  accompanied by substantial aggravating
  circumstances.

125
126
Rule 11 - Sanctions
126
127
Hill v. Hill(NC App 2005) (63)

• HELD
• The trial court properly entered sanctions under
  Rule 11 and G.S. 6-21.5 totaling 116,276.69
  because there was insufficient evidence to
  establish a factual basis to prove any claims of
  fraud. Inquiry by the plaintiffs attorney
  would have produced evidence that there were no
  grounds for the fraud allegations.
• Only the appellate court may award sanctions for
  frivolous appeals.

127
128
HELD (Contd.)

1. Sanctions for conduct during discovery may be
   awarded under Rule 11 because they relate to the
   insufficiency of the complaint.
2. Sanctions for fees and expenses during discovery
   may be awarded after the hearing on the motion
   for summary judgment because the plaintiffs Rule
   11 violations were not determined until the
   summary judgment hearing.

128
129
Melton v. Tindall Corp. (NC App 2005) (65)

• Issues
• When the trial court dismisses all claims of the
  plaintiff pursuant to Rules 37 and 41, whether
  the standard of appellate review is for abuse of
  discretion?
• Whether the trial court properly considered the
  plaintiffs invoking of the Fifth Amendment
  privilege against self incrimination in
  dismissing the complaint?

129
130
FACTS

• After jury in another case found the defendant
  liable in the collapse of a pedestrian walkway at
  the Lowes Motor Speedway, the trial judge ruled
  that the issue of liability had been established
  in all cases by collateral estoppel.
• The plaintiff in the present case alleged lost
  profits and diminution in future earning capacity
  arising from his self employment as a general
  contractor. The plaintiff had built one house as
  a general contractor.

130
131
FACTS (Contd.)

• Despite discovery requests, motions to compel and
  an order compelling production of the plaintiffs
  income tax returns, the returns were not produced
  until a second deposition of the plaintiff. This
  return had no information about the one house
  constructed.
• When the plaintiff was asked about this house and
  the failure to identify it on his tax return, he
  invoked the Fifth Amendment privilege against
  self-incrimination.
• The trial judge dismissed all claims under Rules
  37 and 41.

131
132
HELD Affirmed.

1. A trial judges imposition of sanctions under
   Rule 37 is reviewed on appeal for abuse of
   discretion.
2. A civil plaintiff who invokes the Fifth
   Amendment to thwart discovery subjects his claim
   to dismissal.

132
133
Baker v. Speedway Motorsports, Inc.(NC App 2005)
(65)
HELD

1. When the plaintiff did not identify an expert as
   required by the courts scheduling order, the
   trial judge did not abuse his discretion in
   excluding the experts testimony.
2. When the plaintiff did not produce her medical
   records concerning previous medical treatment for
   her back, the trial judge did not abuse his
   discretion in precluding the plaintiff from
   introducing evidence that her back injury was
   caused by the pedestrian walkway collapse.

133
134
Rule 13(a) Compulsory Counterclaims
134
135
Jonesboro United Methodist Church v.
Mullins-Sherman(NC 2005) (70)
Issue In dispute arising out of construction
contract, when contractor filed a suit for breach
of contract and contractor was granted summary
judgment by trial court, whether subsequent suit
by owner for breach of the construction contract
was a compulsory counterclaim in the previous
suit, and, therefore, barred?
135
136
FACTS

• Batten entered into a contract with the plaintiff
  to construct a fellowship hall.
• Disputes arose about the quality of Battens
  work.
• The church sent a check for 101,000 to Batten
  accompanied by a letter indicating that the check
  was to satisfy the construction relationship.
• The church then rescinded the letter and
  agreement to resolve the differences.

136
137
FACTS (Contd.)

• Batten filed suit in Forsyth Superior Court
  seeking 101,000 in damages. The trial court
  granted Battens motion for summary judgment, the
  Court of Appeals affirmed and the Supreme Court
  denied review.
• The present suit was brought by the church in Lee
  County Superior Court for breach of contract.
• Batten filed a motion for judgment on the
  pleadings on the basis that the present Lee
  County claims were compulsory counterclaims in
  the Forsyth County action.
• The trial court denied Battens motion and the
  Court of Appeals affirmed.

137
138
HELD Reversed.

• Both the Forsyth and Lee County actions involved
  allegations about whether Batten had performed
  the construction in a satisfactory manner.
• Because the federal and state versions of rule
  13(a) are identical, the court relied on federal
  cases for its analysis of whether counterclaims
  were compulsory. The court found (1) issues of
  law and fact in both suits were almost the same
  (2) the same evidence related to both suits and
  (3) there was a logical relationship between the
  two suits.

138
139
Discovery
139
140
Miller v. Forsyth Memorial Hosp., Inc.(NC App
2005) (72)
Held When the plaintiff moved to compel
documents to be produced by the defendant that
were identified in the defendants privilege log,
and the trial court denied the plaintiffs motion
to compel, and the plaintiff did not make an
offer of proof or put other information in the
record concerning the documents requested, the
Court of Appeals had no basis to review the trial
courts denial of the motion to compel. The
plaintiff could have requested that the trial
court review the documents in camera and then
seal the documents for appellate review.
140
141
Armstrong v. Barnes,(NC App 2005), review denied
(73)

• Issues
• Whether a discovery order involving a statutory
  privilege is appealable?
• Although testimony concerning the defendants
  drug use occurred before a hospital board and is
  protected by a statutory privilege, when the
  defendant has independent knowledge of the same
  facts, whether the privilege applies?

141
142
FACTS

• The complaint alleged medical malpractice arising
  from the defendants delivery of the plaintiffs
  child in February 2000.
• During the deposition of the defendant, the
  defendants attorney objected and instructed the
  defendant not to answer questions about his
  history of drug abuse.

142
143
FACTS (Contd.)

• The defendant then moved for a protective order,
  but the trial court ordered the defendant to
  answer questions about his drug use.
• The defendant had a history of drug use before
  delivery of the plaintiffs child. In order to
  obtain credentialing at the hospital, the
  defendant had to appear before the hospitals
  board, which