Hurricane Sandy Reaches The North Carolina Business Court

North Carolina has had more than its fair share of hurricanes over the years, but Hurricane Sandy, which hit New Jersey and New York City, even reached the North Carolina Business Court.

It came in the most mundane of motions, one to expand the word limitation for a brief.  The Order is in Gusinsky as Trustee for the Vladimir Gusinsky Living Trust v. Duke.  

The Motion was filed by the Plaintiffs on the same day an overly long brief was filed.  That violates Business Court Rule 15.8, which says that:

Requests for expansion of word limitations shall be made five (5) business days prior to filing the brief for which expansion of word limitations is sought. Requests for expansion of word limitations that are filed simultaneously with the brief shall be denied.

But this Motion was granted notwithstanding the untimely filing.  Why?  Plaintiff's counsel said that they couldn't comply with the Rule due "to communication issues among counsel caused by Hurricane Sandy."  Order 4.  Plaintiff;s counsel are located in New York City.

Judge Jolly recognized the havoc caused by the storm, saying:

The court acknowledges that Hurricane Sandy caused flooding, power outages and devastating damage along the East Coast of the United States, and the court is sensitive to issues created by this natural disaster. However, the court encourages counsel to recognize that compliance with the BCR promotes efficiency and fairness in case administration.

Op.h 4 & n.1.

In this case, though, the hurricane trumped the Business Court Rules.  But don't look for this pass to be given out again.  That was a thousand year storm.  Follow the Rules in the absence of severe weather conditions.

 

 

 

Harvey v. Schwartz, April 14, 2009 (Diaz)(unpublished)

After a case is designated to the Business Court, the Clerk of Court in the county in which the case is pending no longer has the authority to grant a motion for extension of time.  In this case, per Business Court Rule 9.2, the Court struck the Order entered by the Clerk granting an extension of time and directed the party to re-file a motion in compliance with the rules of the Court.

Order

Estwanik v. Gudeman, March 6, 2009 (Diaz)(unpublished)

The Court struck an Entry of Default which had been signed by an assistant clerk of court in the county where the case had been filed.  The entry of default was signed after the case was designated to the Business Court.  Judge Diaz cited Business Court Rule 15.1, stating:

Because the above-captioned cases are Business Court cases, the Clerk of Court had no authority to enter this Order and Entry of Default. See BCR 15.1 (“After a case has been assigned or designated to the Business Court, and for as long as the case is pending in [the Business] Court, parties shall seek rulings on all motions in the case from [the Business] Court, and not from Superior Court Judges or Clerks in the counties where the cases originate.”).

Full Opinion

Medicus Healthcare, LLC v. Nazemetz, February 25, 2009 (Diaz)(unpublished)

The Court struck Defendants' Motion for Summary Judgment because it violated Business Court Rule 15.2, which requires that "[]ll motions, unless made orally during a hearing or trial, . . . be in paper writing or electronic form and . . . be accompanied by a brief . . . set out in a separate paper."  Defendants had incorporated their Motion and the arguments in support of the Motion into a single filing. 

The Court granted leave to refile the Motion, but observed that it had been filed before the close of discovery, and stated that "[w]hile it is true that, pursuant to Rule 56, '[a] party seeking to recover upon a claim . . . may, at any time after the expiration of 30 days from the commencement of the action . . . move with or without supporting affidavits for a summary judgment in his favor[,]' N.C. R. Civ. P. 56(a) (2007), a 'motion filed at the outset of a case that is not limited to purely legal issues should be carefully scrutinized because at least some discovery is usually warranted where factual contentions are in dispute,' 2 G. Gray Wilson, North Carolina Civil Procedure § 56-7 (3d ed. 2007)."

The Court said that it would "carefully scrutinize any such Motion to determine whether it should be heard before the close of discovery."

Full Opinion

Camper v. Brooks, October 27, 2008 (Diaz)(unpublished)

The parties failed to submit their designation of mediator to the Court by the deadline provided for in the Case Management Order, and also after an inquiry from the Court.  The Court held that the parties had as a result "forfeited their right" to select a mediator. 

The parties were also delinquent in filing their good faith estimate of costs.  The Court ordered that document to be filed by a set date, and held that if the parties did not complete that filing that they would be required to show cause why they should not be held in contempt.

Full Opinion

Cruising And Recusing: Motion To Recuse Is Stricken By The North Carolina Business Court

This post is about an Order Striking a Motion for Recusal by the North Carolina Business Court, in J. Freeman Floor Company, LLC v. FreemanThe Motion was stricken because it was procedurally defective, but the factual allegations which the Plaintiff claimed warranted recusal were interesting, as was the way in which Judge Diaz handled those allegations.

The Plaintiff moved to recuse Judge Diaz from hearing the Defendant's Motion for Sanctions.  The argument for recusal ran like this: Plaintiff asserted that (1) Defendant's counsel (Winson) had  been counsel for Carnival Cruise Lines, (2) Carnival Cruise Lines had in the past been represented by Hunton & Williams, (3) Judge Diaz had formerly been an attorney with Hunton & Williams (even at the same time he was a Superior Court Judge, said the Plaintiff) , and (4) Judge Diaz had improperly reopened the case (which had been dismissed) in order to hear the Rule 11 Motion. 

The specific allegations made in the Motion for Recusal were that:

Mr. Winson has close and substantial ties with Hunton & Williams by virtue of his long and substantial relationship with Hunton & Williams' clients Carnival Corporation and Carnival Cruise Line.  Judge Diaz has close and substantial ties with Hunton & Williams due to his long and recent association with Hunton & Williams.  Mr. Winson's substantial ties to Hunton & Williams and Judge Diaz's substantial ties to Hunton & Williams creates a conflict of interest which Plaintiffs in good faith believe would prevent Judge Diaz from being fair and impartial to the Plaintiffs with regard to Mr. Winson's Rule 11 motion which was purposefully set before Judge Diaz in a closed case file which had to be re-opened in order to bring said motion before Judge Diaz, despite the fact that Mr. Winson could have filed the Rule 11 motion in the new case file which would not have been heard by Judge Diaz.  Thereafter, Mr. Winson removed the new case file to business court and purposefully requested that Judge Diaz be assigned to the case.  For these reasons, Plaintiffs in good faith do not believe that they will receive a fair and impartial decision with regard to Mr. Winson's Rule 11 motion.

The Motion to Recuse further alleged that Judge Diaz, who has been a Superior Court Judge since 2001, had been appearing in Court for Hunton & Williams clients as recently as 2006.  It referenced as support for this assertion several federal court opinions decided between 2003 and 2006 in which Judge Diaz was listed as counsel of record along with another Hunton & Williams attorney. (The Plaintiff was right about Judge Diaz being listed as counsel in those cases, but they all were filed before Judge Diaz took the bench).

The Plaintiff claimed that as a result of these facts there was an appearance of a "special relationship between Mr. Winson and Judge Diaz," and that this "would tend to give the appearance of impropriety." 

Judge Diaz didn't get to the merits of the Motion in his Order, but instead struck the Motion because it was filed without a brief, in violation of Business Court Rule 15.2.  He noted that the Rule violation would ordinarily result in a summary denial of the motion, but gave the Plaintiff ten days to refile its Motion (with a Brief).  The ten days have run out, and the Motion hasn't been refiled.

That's probably because notwithstanding the striking of the Motion, Judge Diaz gave the Plaintiff a direct response to its assertions showing that they didn't have any basis. The highlights are as follows:

  • With regard to the allegations that he had been practicing law while a Judge, Judge Diaz said "[s]ince taking the oath of office as a superior court judge in November 2001, I have not practiced law, whether with my former firm Hunton & Williams, LLP or any other firm. Indeed, such activity would be patently inconsistent with my oath as a judge and would also violate the North Carolina Code of Judicial Conduct. See N.C. Code of Judicial Conduct, Canon 5(F) (“Practice of law. A judge should not practice law.”)."
  • With regard to the allegations that Hunton & Williams had represented Carnival, Judge Diaz stated that was "news to me," and that "to the best of my knowledge and recollection, I never represented Carnival . . . during my tenure at H&W."
  • On whether he had a relationship with Carnival's former General Counsel, Judge Diaz said that he "had never met Mr. Winson during my tenure at H&W" and that the first time he had encountered him was by telephone when Winson was in Court on another Business Court case.
  • On the point of whether it was proper to reopen the case to hear the Rule 11 Motion, Judge Diaz observed that "the law is clear that a trial court retains jurisdiction to hear a motion filed pursuant to Rule 11 of the North Carolina Rules of Civil Procedure, even after the case is dismissed."  

The picture at the top is of one of Carnival's fleet of cruise ships, the Carnival Fantasy.

Velocity Fiber Broadband, LLC v. Lang Management, Inc., Sept. 10, 2007 (Jolly)(unpublished)

Business Court Rule 9.2 says that "the movant shall have a good faith basis for requesting any . . . extension of time and, except in extraordinary cases, the movant shall first consult with any opposing party and reflect that party's position in the motion and indicate whether the opposing party wishes to be heard on the motion."

If you don't follow the Rules, you aren't going to get your extension.  In Velocity Fiber Broadband, LLC v. Lang Management, Inc., the required consultation hadn't occurred.  Judge Jolly, in denying the plaintiff's motion to respond to a counterclaim, stated "notwithstanding that the . . . reporting requirements of Rule 9.2 of the Business Court Rules may be viewed by some as merely a technicality and not substantive, the requirements are clear and simple, and compliance with them promotes efficiency in case administration by the court and counsel."

Full Opinion

Other cases denying a Motion for Extension of Time for the same reason are TelSouth Solutions, Inc. v. Voyss Liquidation Co., October 17, 2008 (Diaz)(unpublished); Cape Fear Realty, LLC v. Cape Fear Trading Group, LLC, November 12, 2008 (Jolly)(unpublished); and A-1 Pavement Marking, LLC v. APMI Corp.January 2, 2009 (Diaz)(unpublished).

Rules Are Rules, Make Sure To Comply With Those Of The Business Court

In North Carolina Superior Court, there is no civil procedure tradition more respected than the courtesy of a thirty day extension of time to answer a Complaint or to respond to discovery.  Like it or not, motions seeking the extra month are granted almost without exception, and are so routine that the requesting party usually doesn't even bother to ask for the consent of opposing counsel.

The same courtesy applies in the Business Court, but there are rules to be followed.  Business Court Rule 9.2 says that "the movant shall have a good faith basis for requesting any such extension of time and, except in extraordinary cases, the movant shall first consult with any opposing party and reflect that party's position in the motion and indicate whether the opposing party wishes to be heard on the motion."

If you don't follow the Rules, you aren't going to get your extension. That's the message of a short ruling today in Velocity Fiber Broadband, LLC v. Lang Management, Inc., in which the required consultation hadn't occurred.  Judge Jolly, in denying the plaintiff's motion to respond to a counterclaim, stated "notwithstanding that the . . . reporting requirements of Rule 9.2 of the Business Court Rules may be viewed by some as merely a technicality and not substantive, the requirements are clear and simple, and compliance with them promotes efficiency in case administration by the court and counsel."

There are hyperlinked Business Court Rules available on the sidebar of this blog.  By hyperlinked, I mean that you can click on a section of the table of contents of the Rules and you'll get taken to the particular Rule, and then you can click back again.

Wicks v. Moody, May 14, 2008 (Tennille)(unpublished)

Compliance with the meet and confer obligations contained in Business Court Rule 18.6 is essential before the filing of a discovery motion.

In this case, the Court denied the Plaintiff's Motion for a Protective Order because of counsel's failure to comply with the certification requirements of that Rule.  Judge Tennille held that "this reason alone is sufficient for the Court to deny Plaintiff's motion."

Full Opinion

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 ends on a weekend or holiday, this is how you calculate the response period:

"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."

Also, when the response is due to a document which has been 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, the count for the response starts when the party from which the response is due is served pursuant to North Carolina Rule of Civil Procedure 5(b). If an Order has been entered requiring e-filing, however, service will be complete when the party filing the document to which the response is due receives notice of its own e-filing.  Business Court Rule 6.4 says that an electronic filing is complete when the person filing the paper gets a Notice of Electronic Filing.  Business Court Rule 6.5 says that e-filing is an "adequate and timely substitute for service" under the Rules of Civil Procedure.

It makes no difference in this situation if the party from whom the response is due is unaware of the e-filed document.  The Court held that "all parties have an affirmative duty to check the status of cases they have in front of the Business Court before they are registered to e-file as the Court’s filings are all made via the electronic system." 

Full Opinion