North Carolina Business Litigation Lawyer & Attorney : Mack Sperling : Brooks Pierce Law Firm : Greensboro, Raleigh, Winston-Salem, Charlotte

This short Order has a valuable nugget on the discoverability of communications between lawyers and their expert witnesses.

One of the Defendants moved to compel discovery from the Plaintiff to obtain documents exchanged between the Plaintiff's lawyers and their expert. 

The expert, however, was also the President of the client and the central fact witness.  Plaintiff resisted production on the grounds of attorney-client privilege. 

It made no difference to the Court that the expert was also the client.  It held:

"Plaintiff’s assertion of the attorney client privilege to shield discovery of any communications with counsel involving his expert opinions is misplaced. Expert witnesses are subject to specific rules of discovery under the North Carolina Rules of Civil Procedure. N.C.R. Civ. P. Rule 26(b). Generally, the facts known to and the opinions held by an expert are discoverable as well as the materials the expert relied upon in coming to his or her opinion. See id. at Rule 26(b)(4), 26(b)(1). If [the expert's] opinions are based upon any information supplied to him by counsel that information is discoverable and Plaintiff is required to make disclosures of that information."

There are no cases cited in the Court's Order, but Defendant's Brief contains references to a number of cases on the issue of discovery of communications between attorneys and their expert witnesses.

The earlier post on this case, Azalea Garden Board & Care v. Vanhoy, involved an issue of discoverability of settlement agreements.

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Gateway Management Services, Inc. v. Advanced Lubrication Technology, Inc., 2008 NCBC 11 (N.C. Super. Ct. May 5, 2008)(Tennille)

When you have an additional three days to respond to a filing served by mail, and the response period ended on a weekend or holiday, do you start counting the three days on the holiday or weekend day, or do you start from the first business day after the expiration of the response period?

The North Carolina Business Court answered this counting question, and another important time calculation question, today in the Gateway Management case.  (You can click on the case name at the top to see the opinion).

The issue was the timeliness of Plaintiff's Reply to Defendant's Counterclaim.  The Plaintiff said that the right method of counting was to count first the thirty day response time allowed by Rule 12(a), and that if the thirtieth day fell on a weekend or holiday, to count the three days from the first following business day.  (Note: this is exactly the right way to count under the comment to the 2005 amendments to Federal Rule of Civil Procedure 6(d), which is worded differently than the North Carolina Rule).

The Court disagreed with the Defendant on when to start counting the three days for service by mail.  Here's what it held:

"The correct formula for the computation of a time period during which a filing is required is as follows: number of days allowed under applicable statute + three days under Rule 6(e) + any weekend or holiday under Rule 6(a). The Court notes that the three days under Rule 6(e) is added to the end of the time period allowed by statute regardless of whether that time period ends on a Saturday, Sunday, or legal holiday. It is at the end of the additional three days that Rule 6(a) applies."

The Court also dealt with another time calculation issue: when to start counting the time for a response when the document to which the response is due is e-filed, but the party who has to respond has not yet registered to e-file and no Order requiring e-filing has yet been entered.   Even though this might be a rare situation, there's potential danger here, so you might want to keep reading.

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Covenant Equipment Corp. v. Forklift Pro, Inc., 2008 NCBC 10 (N.C. Super. Ct. May 1, 2008)(Tennille)

A service of process issue and a covenant not to compete issue in one decision from the Business Court.  It doesn't get any more exciting than this.  But, seriously, this is a significant procedural decision from the Court, please read on.  (As always, there is a link to the full opinion above).

On the service issue, the delivery of the Complaint to one of the Defendants, Carnie, had not been made in precise compliance with Rule 4 of the North Carolina Rules of Civil Procedure.  The Sheriff had left the Summons and Complaint at Carnie's house in South Carolina, but had not delivered it personally to Carnie and had not left it with another person at the residence.  According to Carnie's Affidavit, the papers had been "left stuck in a crack between my doors" by a Deputy Sheriff with the last name of "Fudge."

The Court overruled the Motion to Dismiss for insufficiency of service of process because it found that Carnie had evaded service.  Looking at federal decisions, Judge Tennille ruled that leaving the Summons and Complaint at Carnie's residence was adequate service given Carnie's efforts to evade proper service.

But the groundbreaking part of the the decision on the service issue was the Court's ruling that Carnie had waived his objection to service because he had filed a Notice of Designation of the case to the North Carolina Business Court.  Judge Tennille held that "the filing of a Notice of Designation in an action constitutes a general appearance for the purpose of personal jurisdiction."  Thus, the objection to the sufficiency of service was waived.

The Court's decision goes beyond service of process.  Most significantly, if you are representing a Defendant planning to move to dismiss for lack of personal jurisdiction, you will waive that argument by filing a Notice of Designation to the Business Court.  To keep it alive, the Notice of Designation must contain an objection to personal jurisdiction.  Carnie's Notice did not.

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Ikerd v. Greenwood, 2008 NCBC 9 (N.C. Super. Ct. April 30, 2008)(Tennille)

Yesterday, the Business Court provided more clarification on the requirements for making a timely designation of a case to the Business Court. 

It held that a Notice of Designation must be actually filed in the county in which the case originated within thirty days of receipt of service of the Complaint in order to be timely, not just served within that time frame.

One of the defendants in the Ikerd case had faxed his Notice of Designation to the Chief Justice of the North Carolina Supreme Court and to the Chief Judge of the Business Court less than thirty days after he had been served with the Complaint.  But he didn't file the Notice of Designation with the Clerk of Court of Catawba County until more than thirty days after he'd been served. 

Judge Tennille held that this was not a timely Notice of Designation under the terms of N.C. Gen. Stat.Sec. 7A-45.4(b), which allows a defendant to designate an action as a complex business case "by filing a Notice of Designation in the Superior Court in which the action has been filed and simultaneously serving the notice" on opposing counsel, the Chief Judge of the Business Court, and the Chief Justice within thirty days after receipt of service of the Complaint.

"Filing" means actual filing within thirty days in the Court in the County in which the case was filed.  And in counting the thirty days, the Court also held that a defendant doesn't get to count an additional three days if the Complaint was served by mail. 

The full procedure for designating a case to the North Carolina Business Court is described here. 

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The answer to the question above is probably you, if you are reading this blog.

So, you might be interested in a powerpoint presentation that Judge Jolly and Judge Diaz made at the 2006 Conference of Superior Court Judges, on the Unfair and Deceptive Practices Act. 

It seems like a claim under that statute is part and parcel of nearly every business case filed in North Carolina.

There are some good "Practical Pointers" about the statute at the end of the presentation, including the one in the box at the bottom. (The Meineke case referenced is Broussard v. Meineke Discount Muffler Shops, Inc., 155 F.3d 331 (4th Cir. 1998), in which the Fourth Circuit threw out a $590 million unfair and deceptive practices verdict).

Notwithstanding my selection of excerpt from the powerpoint, this is by no means an anti-unfair and deceptive practices presentation.  It outlines a number of fact patterns that make out a UDPA claim, and has a good discussion of the respective roles of judge and jury in the trial of such claims and other useful information.

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Warren v. Eli Research, Inc., April 28, 2008 (Diaz)(unpublished)

Inconsistent allegations in the Complaint doomed the claim for fraudulent inducement by one of the Plaintiffs in this case. 

That Plaintiff, Hittle, alleged that the Defendant had promised her an annual salary of $150,000, guaranteed for 12 months, but that it had no intention of fulfilling this promise when made.  The Defendant booted Hittle only a few months after she began employment.

What led to the granting of Defendant's Motion to Dismiss were Hittle's allegations in the Complaint that she had begun her employment, worked for three months, been paid for that work, and that she was terminated for "financial reasons."

The Court held "it is patently inconsistent for Hittle to allege, on the one hand, that Defendant never intended to pay the wages promised, and on the other, that Defendant in fact performed in part and that it failed to complete performance for reasons unrelated to its intent."  The Court held that partial performance of a contract demonstrates a party's intention to fulfill the promise at the time it was made, undermining Hittle's claim on its face.

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Each year, the United States Chamber Institute for Legal Reform rates the "Lawsuit Climate" for business in each of the fifty states.  The Institute just released its 2008 Report.  North Carolina ranked 21st overall, down from a ranking of 16th in 2007 and 10th in 2006.

The rankings are based on a survey of several hundred in-house counsel.  A respondent could grade the judicial system in a number of states on a scale from "A" to "F," so long as he or she professed to be "somewhat familiar" with the courts of those states. 

North Carolina's 21st place ranking is based on the responses of 58 lawyers in the survey group who said that they met the standard of being "somewhat familiar" with North Carolina's courts.   (I wonder if these in-house counsel are satisfied if the lawyers representing them are "somewhat familiar" with their cases when they go to court).

The rating factors included things like:

• overall treatment of tort and contract litigation
• treatment of class action suits and mass consolidation suits
• judges' competence

North Carolina's grade and ranking on each of the rating factors is here.  The State ranked highest overall in treatment of punitive damages (11th), and lowest in treatment of "non-economic damages" (37th). 

What state came in first?  Delaware, for the seventh year in a row.  Last?  West Virginia.

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The Fourth Circuit Court of Appeals is going to require that all briefs be electronically filed, beginning June 1, 2008.  E-filing has been optional since April 1st. 

In order to e-file, you need to go through Fourth Circuit training, and you have to register for an "Appellate Filer Account."  The training is required even if you are already authorized to e-file documents in the District Courts.  Detailed instructions from the Fourth Circuit on this whole process are here and also summarized in the rest of this post.

At some point during the registration, you'll need to have a PACER account.  If you don't have one, or your firm doesn't have one, you'll need to register for that. 

You can register here at any time for the Appellate Filer Account, but your Account won't become active until after you've completed the training.  If you don't take the training and complete the process within a week after your registration for the Appellate Filer Account, you'll have to re-register for the Account.  It probably makes more sense to train first and register after.

On the training, you can sign up for live training here.  That's happening in Raleigh on May 21st and 22nd; in Charlotte on June 10th; and in Greensboro on June 18th and 19th.  The live training takes about two and a half hours. 

On-line training is also available. Information on that is available here.  What you need to do is to watch the Electronic Learning Modules for "Filing an Appearance of Counsel" and "Filing a Motion to Seal," then take the "Policies and Procedures Review," which is a 10 question quiz based on the CM/ECF User Manual, and then submit the On-Line Training Certification Form.  (I've heard that this takes about half an hour, so it's faster than the live training). 

The Court has adopted new Rules concerning e-filing.

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Her v. Davis, April 16, 2008 (Diaz)(unpublished)

This opinion appeared yesterday on the Business Court website.  It's not a Business Court case (it's actually a car accident case), but it presents a good lesson on what it takes to properly oppose a Motion for Summary Judgment.

The issue was whether Defendant's insurance carrier had accepted a settlement offer from Plaintiff's counsel before the lawsuit was filed, thus barring the lawsuit from proceeding.

The Defendant presented an Affidavit from the insurance carrier stating that a lawyer representing the Plaintiff had offered to settle the case for $10,000, and that the carrier had accepted the offer.

Plaintiff disputed this, but didn't present any Affidavit in support of her position.  Instead, Plaintiff tried to rely upon her own responses to Requests for Admission served by the Defendant, in which she said that the true facts were that it was Defendant's carrier who had made the $10,000 offer, and that her lawyer had rejected it. 

The Court held that "while admissions of a party-opponent are not hearsay, 'a party may not utilize his own admissions at trial.'"  Since evidence that would not be admissible at trial may not be considered on a Motion for Summary Judgment, there was no competent evidence contradicting Defendant's properly supported factual position.  The Court also refused to rely on letters presented by Plaintiff's counsel containing unsworn facts.

As the Court put it, "the bottom line is that neither Plaintiff nor any member of the firm representing Plaintiff have submitted Affidavits refuting the facts set forth" in the Affidavit submitted by Defendant.  On the record before it, the Court granted Defendant's Motion for Summary Judgment and found that the case had been settled on the terms described by the Defendant.

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