Decisions Last Week From The North Carolina Court Of Appeals

There weren't any opinions from the Court of Appeals last week which would have been considered for the legal equivalent of an Oscar, but three cases are worth an honorable mention.  They involve arbitration, the statutory requirements for contracting with a municipality, and a healthcare law case involving Certificates of Need.

Arbitration

The arbitration case is WHD v. Mayflower Capital, LLC, in which the Court made a rare reference to the Commercial Arbitration Rules of the American Arbitration Association. The Defendant argued that the arbitrator had erred by failing to require the Plaintiff to produce a settlement agreement. The Court disagreed, noting the authority that an arbitrator has under AAA Rule 21 (permitting an arbitrator to direct the production of documents, and authorizing an arbitrator "to resolve any disputes concerning the exchange of information”) and AAA Rule 31 (stating that the parties “shall produce [at the hearing] such evidence as is relevant and material to the dispute.”).

The Court also rejected the Defendant's argument that the arbitrator had made a mistake by permitting the introduction of a criminal conviction of the Defendant which would not have been admissible under the Rules of Evidence.  It said twice in its opinion that “if an arbitrator makes a mistake, either as to law or fact, it is a misfortune of the party, and there is no help for it,” quoting an 1895 Supreme Court decision, Patton v. Garrett, 116 N.C. 848, 21 S.E. 679 (1895).  John Ormand in Brooks Pierce's Raleigh office represented the Plaintiff.

Contracting With Municipalities

The municipality case is National Railroad Museum and Hall of Fame, Inc. v. City of Hamlet.  Hamlet was the home of the National Railroad Museum and Hall of Fame.  According to the Court's opinion, the Museum housed "exhibits, antiques, artifacts, and general materials relating to the development of the railroad industry in North Carolina and the United States as a whole." 

The Museum operated in a building leased from the City, but the parties appeared to have agreed that the building would be torn down and that they would attempt to obtain financing to build a new home for the Museum's artifacts.  When that didn't happen, the Museum sued. 

Blocking the tracks for the Museum was Section 160A-16 of the General Statutes, which requires contracts by or on behalf of a city to be in writing, and which says "a contract made in violation of this section shall be void and unenforceable unless it is expressly ratified by the council."  Although the City Council had adopted a resolution supporting "the depot project," and it had submitted a funding application to the Department of Transportation, the Court of Appeals held that these facts didn't make out either an express contract or a duly ratified agreement.

Certificate of Need

Last, the CON decision is Total Renal Care of NC, LLC v. North Carolina Dept. of Health and Human Services, The Court held that when a party awarded a CON completes the construction of the facility and it becomes fully operational, an appeal challenging the award of the CON is moot.  The Court relied on a 2005 per curiam decision of the North Carolina Supreme Court in Mooresville Hosp. Mgmt. Assocs. v. N.C. Dep't of Health & Human Services, 360 N.C. 156, 622 S.E.2d 621 (2005), and held:

Both parties recognized during the pendency of this appeal that, as in Mooresville,  the appeal could become moot upon the completion of BMA's facility. We must presume that the General Assembly recognized such a possibility in enacting the CON Law. Even if the General Assembly failed to recognize this possibility prior to the Supreme Court's decision in Mooresville, in the more than three years since that case was decided, the General Assembly has not revised the CON Law to provide for a stay of either the construction or operation of a facility for which a CON has been issued pending an appeal from a final agency decision.

So if you are awarded a CON, build fast.  Or at least faster than the Court of Appeals can rule.

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