North Carolina Business Litigation Report

Stream Of Commerce, Legal Malpractice, And More: North Carolina Court Of Appeals Rulings Today

The Court of Appeals issued today a number of opinions worth a mention, running the gamut from two personal jurisdiction rulings to a significant legal malpractice decision.

Personal Jurisdiction

The opinion in Brown v. Meter contains a thorough discussion of personal jurisdiction based on product sales in the "stream of commerce," with a mention of virtually every North Carolina case on the subject. At the end, the Court held that the Plaintiffs could pursue wrongful death claims in Forsyth County Superior Court against a Turkish affiliate of Goodyear Tire for an accident that occurred in France. The Court found that the Defendants had "purposefully injected [their] product into the stream of commerce" with the result that thousands of tires manufactured by each of the Defendants had been distributed in North Carolina. It further noted North Carolina's "well-recognized interest in providing a forum in which its citizens are able to seek redress for injuries they have sustained," and the burden of requiring the Plaintiffs to litigate in France.

In another personal jurisdiction case, Barloworld Fleet Leasing, LLC v. Palmetto Forest Products, Inc., the Court of Appeals affirmed a finding of personal jurisdiction over the South Carolina customer of an equipment leasing company. The Court held that "the contracts and attendant regular payments [made by the Defendant to the NC Plaintiff] represented 'continuing obligations' between defendants and a resident of North Carolina," and this was sufficient to make out the necessary minimum contacts. The Court rejected the Defendant's argument that the Plaintiff should be required to show that it would be inconvenienced by having to litigate the short distance over the state line into South Carolina. It said it found no case supporting "the proposition that a convenient location for the plaintiff other than the forum State shows that the exercise of jurisdiction over the defendant offends fair play and substantial justice."

Legal Malpractice

In a case of first impression, the Court held in Whiteheart v. Waller that a client who was in pari delicto with his lawyer could not pursue a claim for legal malpractice. The client had encouraged his lawyer to pursue earlier litigation that had no basis. The dismissal of that case resulted in a second lawsuit, this one against the client for abuse of process, in which the client was socked with a $700,000 jury award. The client then sued his lawyer for malpractice, and the trial court dismissed the case.  The Court of Appeals affirmed. Quoting the Supreme Court of Wisconsin, Judge Calabria said "[a] court should not encourage others to commit illegal acts upon their lawyer's advice by allowing the perpetrators to believe that a suit against the attorney will allow them to obtain relief from any damage they might suffer if caught."

North Carolina Mortgage Lending Act

The decision in Guyton v. FM Lending Services, Inc. is another case of first impression. The Court held that a lender was liable under the North Carolina Mortgage Lending Act for failing to disclose that real property for which it was making a loan was located in a flood plain (a "special flood hazard area."). The claim involved more than an oversight, it was that the defendant had "actively and intentionally withheld the information that the property lay in a flood plain." Judge Ervin further found that the claim was not preempted under the National Flood Insurance Act

Arbitration

The case of United States Trust Co. v. Stanford Group Company reminds, yet again, that when a trial court denies a motion to compel arbitration, it must state the reasons for denying the motion, including determining whether the parties had a valid agreement to arbitrate and whether the specific dispute falls within the substantive scope of that agreement. The Court of Appeals remanded the case to the trial court for proper findings.

Preemption Under The LMRA

The Court of Appeals pancaked a former player for the Carolina Panthers in Jeffers v. D'Alessandro, ruling that his claims against the football team involving his medical treatment were preempted bt\y Section 301 of the Labor Management Relations Act. Judge Geer, relying on two federal court decisions involving similar claims by other NFL players, said that "the touchstone of Jeffers' claims -- no matter how couched or labeled -- is that the Carolina Panthers acted improperly in providing him medical care through the team physician.  These claims necessarily derive from the obligations in the [NFL's Collective Bargaining Agreement] and will require analysis of the CBA in order to be resolved." Jeffers has no claim left to make.  He tried to start an arbitration under the CBA during the course of his lawsuit, but it was rejected by the NFL as untimely.

Foreclosure

In an opinion from the burgeoning specialty of foreclosure law, Mosler v. Druid Hills Land Co., Inc., the Court held that the Superior Court couldn't consider the issue of merger as a defense to foreclosure under N.C. Gen. Stat. §45-21.36. The defendant said that the plaintiff couldn't foreclose because the defendant had delivered a deed in lieu of foreclosure (which the plaintiff had refused to accept), resulting in a merger of the note and deed of trust. The clerk of court had refused to allow foreclosure because of what it termed "title issues." The Superior Court ruled that the foreclosure could proceed and the the Court of Appeals affirmed. The appellate court said that merger was an equitable doctrine which could only be raised in an action to enjoin a foreclosure pursuant to N.C. Gen. Stat. §45-21.34, and that there was no subject matter jurisdiction over a merger defense in a foreclosure proceeding initiated before the clerk. A 2007 change in the law regarding appeals from rulings by the clerk (N.C. Gen. Stat. §1-301.1) didn't expand the Superior Court's jurisdiction.

Trackbacks (0) Links to blogs that reference this article Trackback URL
http://www.ncbusinesslitigationreport.com/admin/trackback/151547
Comments (0) Read through and enter the discussion with the form at the end
Mack Sperling
Brooks Pierce, LLP
2000 Renaissance Plaza
230 North Elm Street
Greensboro, NC 27401
336.373.8850

1600 Wachovia Capitol Center
150 Fayetteville Street
Raleigh, NC 27601
919.839.0300