Conference of NC
Superior Court Judges
Smith Moore LLP
16 June 2006
Osetek v. Jeremiah
(NC 2006) (1)
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?
The plaintiff was stopped at a stop sign when she
was struck in the rear by the defendant‟s vehicle.
The plaintiff introduced evidence of medical bills
totaling $15,554.30. The plaintiff‟s treating
chiropractor testified about the plaintiff‟s injuries.
The trial court granted the plaintiff‟s motion for a
directed verdict on the issue of contributory
The jury found the defendant negligent and
awarded the plaintiff $600.
1. G.S. § 8-58.1 does create a rebuttable
mandatory presumption as to the
reasonableness of medical expenses.
2. The parties did not stipulate to the plaintiff‟s
medical expenses, therefore, this was “an issue”
for the jury to decide.
3. The defendant‟s rebuttal evidence questioned
the relationship between the medical expenses
and the accident.
4. The trial judge properly refused to give the
mandatory presumption on the issue of medical
Hofecker v. Casperson (NC 2005) (2)
1. When the defendant‟s 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 defendant‟s 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 defendant‟s motion for
summary judgment on the issue of last clear chance?
The plaintiff was walking home from work on
1 November 2001 at about 6:55 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 defendant‟s motion for
summary judgment on contributory negligence
and last clear chance.
1. 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 plaintiff‟s deposition, he admitted that he
would not have seen the headlights on the
defendant‟s vehicle because “they were coming
Since the defendant first saw the plaintiff when
the plaintiff was in front of the defendant‟s car
and the defendant had no opportunity to avoid
hitting the plaintiff, the plaintiff was
contributorily negligent as a matter of law.
HELD: Affirmed (Cont‟d.)
2. The plaintiff‟s 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 defendant‟s motion for summary judgment
on last clear chance.
Ligon v. Matthew Allen Strickland
(NC App 2006) (4)
1. When the plaintiff testified that he was walking along the
side of the road when he was struck by the defendant‟s
vehicle, but the plaintiff‟s 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?
2. 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?
The plaintiff alleged that he was walking along
the side of the road at night when he was struck
by the defendant‟s 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.
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 defendant‟s request to
instruct on contributory negligence.
HELD: Reversed and new trial ordered
1. 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 defendant‟s 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 plaintiff‟s intoxication and the fact
that he was wearing dark clothes while walking along the
road at night, contributory negligence was for the jury.
2. 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.”
Croom v. Humphrey
(NC App 2006) (6)
When N.C.G.S. § 20-150(d) prohibits crossing
the centerline of a highway at a curve and the
defendant‟s 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
Oakes v. Wooten
(NC App 2005) (7)
1. 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?
2. Whether the trial court properly sanctioned the
defendant for failing to admit the defendant‟s
motor vehicle violations, agency and that the
defendant‟s negligence was the sole proximate
cause of the plaintiff‟s injuries?
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 plaintiff‟s car.
Based on the plaintiff‟s 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.
1. The trial judge properly refused to instruct on
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.
2. 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
plaintiff‟s injuries and contributory negligence.
At the time of the defendant‟s response,
“reasonable grounds existed to believe that they
might prevail on some matters denied.”
Herring v. Food Lion, L.L.C.
(NC 2006) (10)
When plaintiff injured his knee on a stock cart
at defendant‟s 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 defendant‟s motion for a directed
The plaintiff was pushing a shopping cart at the
defendant‟s 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 plaintiff‟s 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 plaintiff‟s knee.
The plaintiff left the store without reporting the
The trial court granted the defendant‟s motion for
a directed verdict.
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
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
Grayson v. High Point Development
(NC App 2006) (11)
When it had snowed for two days at plaintiff‟s
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?
The plaintiff was employed at Belk‟s at the Oak
Hollow Mall in High Point.
A heavy snow had fallen on 25 and 26 January
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 “somebody‟s going to get
killed out there.”
The trial court granted the defendant‟s motion for
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.
“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
Bailey v. Handee Hugo‟s Inc.
(NC App 2005) (12)
When the adjuster for the defendant‟s 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
The plaintiff fell and was injured at Handee Hugo‟s
on 18 April 2001.
The plaintiff was contacted by an adjuster for
Federated Mutual Insurance Company and told
that the Federated insureds were Handee Hugo‟s
and Sampson-Bladen, the operator of the store.
Suit was filed on 29 March 2004 against Handee
Hugo‟s and Sampson-Bladen.
The defendant filed a motion to dismiss on the
grounds that the store was leased and operated by
On 19 July 2004, the plaintiff filed a motion to
amend to add United Energy as an additional
The trial court denied the plaintiff‟s motion to
amend and allowed the defendant‟s motion to
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
4. Although the Court of Appeals found “the
misrepresentation reprehensible,” dismissal was
Wallen v. Riverside Sports Center
(NC App 2005) (13)
Whether defendants/landowners had a duty to
exercise reasonable care concerning trees on
their property that was next to a navigable river?
Defendants owned boat ramp on the Cape Fear
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 plaintiff‟s expert testified that the tree that
fell was extensively decayed and showed
evidence of the decay through many dead
The trial court granted the defendants‟ motion for
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 plaintiff‟s injury and
showed signs of decay.
4. There was a genuine issue of material fact on
the issue of the defendants‟ negligence.
Freeman v. Food Lion
(NC App 2005) (15)
1. Whether Food Lion/owner of store had duty to
warn the plaintiff of hidden dangers?
2. Whether the plaintiff‟s 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?
The plaintiff was shopping at the Food Lion store
when she was struck by a buffing machine
operated by Robinson who was wearing ear
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), Frank‟s Floor Care (the company
contracting with Budget Services to maintain the
floors) and Amron Janitorial (the employer of
The trial court granted the motions for summary
judgment of all defendants.
HELD: Summary judgment reversed as to
Food Lion; affirmed as to all other defendants.
1. As to the plaintiff‟s 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
2. Since neither Budget Services nor Frank‟s 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.
HELD: Summary judgment reversed as to
Food Lion; affirmed as to all other
3. 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.
Little v. Omega Meats I, Inc.
(NC 2005) (17)
Whether defendant is liable for assault
committed by independent contractor of
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.
Smith parked his refrigeration truck in the
driveway next to the plaintiffs‟ house. He broke
into the plaintiffs‟ house and assaulted the
The trial court granted Omega‟s motion for a
directed verdict at the close of the plaintiffs‟
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,
Smith‟s 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.
Hernandez v. Nationwide Mutual Ins. Co.,
(NC App 2005), review denied (20)
When Nationwide‟s 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?
Ms. Norris, the Nationwide insured, was in the
process of purchasing a 1997 Blazer, when she
was involved in an automobile accident with the
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 plaintiff‟s motion for
summary judgment finding that Nationwide had
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 insured‟s
regular use and title had not been
transferred, the Nationwide exclusion did
not apply. There was coverage for the
McGuire v. Draughon
(NC App 2005) (22)
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?
At the time of the accident, Mollie Draughon was
operating her mother-in-law‟s 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.
Mollie Draughon and her husband were insured
by Farm Bureau. The Farm Bureau policy
excluded coverage for vehicles furnished for the
insured‟s regular use.
The trial court granted Farm Bureau‟s motion for
summary judgment finding no coverage.
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
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 Daughon‟s use of the Explorer was
“consistent as well as continuing.”
4. Regular use does not require daily use.
Sawyers v. Farm Bureau Ins.
(NC 2005) (24)
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 plaintiff‟s 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?
The plaintiff was a passenger in a car involved in
an automobile accident in Florida on 10 August
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
Farm Bureau was dismissed from the Florida suit
for lack of jurisdiction.
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 Bureau‟s motion for
The Court of Appeals reversed on the grounds that
Farm Bureau had been served in the Florida action
and was bound by the judgment.
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
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.
Duncan v. CUNA Mutual Ins. Society
(NC App 2005) (27)
1. 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?
2. Whether affidavit relying on hearsay, non-first-
hand facts was sufficient to deny summary
Decedent was insured under life insurance policy
with CUNA that excluded coverage for “voluntary
use of any drug . . . except as prescribed by a
The decedent was found in his living room. The
autopsy report indicated that the cause of death
was “methadone toxicity.”
In opposition to CUNA‟s motion for summary
judgment, the decedent‟s 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
decedent‟s use of methadone.
The trial court granted CUNA‟s motion for
1. 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.
2. The counselor‟s 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.
Exclusion for Intentional Acts
Allstate v. Lahoud
(NC 2005) (29)
1. 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?
2. Whether insured‟s affidavit contending that his
conduct was unintentional or negligent was
sufficient to deny summary judgment to
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.
The plaintiff‟s policy excluded coverage for “any
intentionally harmful act or omission of an
The trial court granted Allstate‟s motion for
1. 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.”
2. “A nonmovant may not generate a conflict
simply by filing an affidavit contradicting his own
sworn testimony where the only issue raised is
The insured could defeat summary judgment on
the issue of his intent by evidence “other than
his own affidavit or deposition contradicting his
Koch v. Bell, Lewis & Associates, Inc.
(NC App 2006) (31)
Whether a third-party, non-insured may sue an
independent insurance adjuster for negligence and
unfair and deceptive trade practices?
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
Bell, Lewis was the adjuster for Southern
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.
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
The trial court dismissed all claims against all
1. Independent adjusters owed no duty to the
plaintiffs who were not the insureds of Southern
Guaranty, therefore, there was no claim for
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
3. The general release applied to all claims, past
and future, arising from the acts of Quality,
therefore, this was an additional reason
Unfair and Deceptive
Page v. Lexington Ins. Co.
(NC App 2006) (32)
1. 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?
2. 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?
An underground sewer line on the plaintiffs‟
property ruptured on 21 February 2001 and
caused property damage and personal injury to
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).
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.
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.
Nationwide Mutual Fire Ins. Co. v. Bourlon
(NC 2005) (35)
1. 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?
2. Whether the attorney may have privileged
communications with the insured about
coverage to which the insurance company is not
entitled to access?
3. Whether suit by the insured alleging bad faith
and negligent representation by the attorney
retained by the insurance company waives any
4. Whether the attorney for the insurance company
should turn over his complete file to the
Nationwide insures Bourlon under homeowners‟
policy with limits of $300,000.
Axarlis sues Bourlon alleging that one of Bourlon‟s
dogs bit him. Claims alleged are malicious
prosecution, abuse of the criminal process, and
Nationwide retains Lee Patterson to defend
Nationwide tells Bourlon that policy excludes
coverage for malicious prosecution and assault.
Jury awards Axarlis $321,000 in compensatory
and punitive damages, including $150,000 in
punitive damages for the malicious prosecution
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
Nationwide settles the covered claims with
Axarlis. Axarlis and Bourlon reach a separate
settlement of the malicious prosecution claim.
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.
Nationwide deposes Bourlon on the remaining
claims. During Bourlon‟s 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.
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
3. 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.”
4. Bourlon, however, waived this privilege by
allegations of bad faith and negligent representation
5. Because there may have been communications in
Patterson‟s 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.
Commercial General Liability
Bond/Tec, Inc. v. Scottsdale Ins. Co.
(NC App 2005) (40)
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?
The plaintiff entered into a roofing contract with the
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 insured‟s own cost,
voluntarily make a payment, assume any obligations, or
incur any expense, . . . without our consent.”
The trial court granted the defendant‟s motion for summary
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.
Charter Medical, Ltd. v. Zigmed
(NC App 2005) (41)
When defendant entered into contract with North
Carolina resident and the contract initially
provided for manufacture, shipment and
installation of the defendant‟s product at the
plaintiff‟s 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?
The plaintiff sent the defendant a proposal for purchase and
shipment of a blood bag manufacturing machine to the
plaintiff‟s 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 plaintiff‟s facility in North Carolina. Four technicians
employed by the defendant installed the machine in North
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.
1. “The mere act of entering a contract with a
forum resident does not provide the necessary
contacts when all elements of the defendant‟s
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 plaintiff‟s damages related
to installation of the machine in North Carolina,
most of the plaintiff‟s damages arose from
allegations that the machine was defective when
shipped from New Jersey.
Havey v. Valentine
(NC App 2005) (43)
The defendant‟s “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.
Banc of America Securities, LLC v.
Evergreen International Aviation, Inc.
(NC App 2005) (45)
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
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.
Statutes and Periods
of Limitation and Repose
Whittaker v. Todd
(NC App 2006) (47)
1. When the defendant guaranteed his work “for as
long as you own the home,” whether the
plaintiff‟s action for property damage was barred
by the six-year statute of repose?
2. 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?
The plaintiff contracted with the defendant in 1991 to
replace the roof on the plaintiff‟s house.
The defendant guaranteed the work “for as long as you own
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 defendant‟s appeal to district court, the district
court granted the defendant‟s motion to dismiss based on
the six-year period of repose in G.S. § 1-50(a)(5).
1. Since the suit was for money damages and not
breach of warranty, the defendant‟s “guarantee”
did not apply and the six-year period of repose
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.
Jack H. Winslow Farms, Inc. v. Dedmon,
(NC App 2005), review denied (48)
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).
Res Judicata and
Nicholson v. Jackson County School Bd.
(NC App 2005) (53)
1. 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?
2. 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 plaintiff‟s discharge was barred
by res judicata and collateral estoppel?
Plaintiff alleged that he was wrongfully terminated
as principal and denied a hearing as required by
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 plaintiff‟s motion to remand for a
hearing before the school board. The plaintiff did
not appeal this order.
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
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
1. 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.
2. 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 plaintiff‟s 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
Pro Hac Vice Admission
In re Cole
(NC App 2006) (55)
1. Whether the trial court abused its discretion in
denying the motion to be admitted pro hac vice?
2. 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)?
The plaintiffs retained Jones to represent them in
relation to the foreclosure of their house in
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.
Jones then filed a complaint contesting the
foreclosure and a motion to be admitted pro hac
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
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
Counsel for the defendants refused to allow the
depositions to be continued.
The plaintiffs did not appear at the times noticed
for their depositions.
The defendants filed a motion for sanctions.
The plaintiffs then filed a pro se complaint.
The trial court denied Jones‟ motion to be
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.
1. The trial judge did not abuse his discretion in
denying Jones‟ motion to be admitted pro hac
Jones had filed several motions and law suits
and appeared before the Clerk without
associating North Carolina counsel or being
admitted to practice.
2. “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.
Saliby v. Conners
(NC App 2005) (59)
Whether the affidavit of the defendant‟s 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 sheriff‟s affidavit of service under Rule
Suit was filed for injuries received in an
The deputy sheriff served the summons and
complaint on the defendant‟s father at a
residence in Wake County.
Although the father accepted the summons and
faxed it to his son in Texas, the father‟s affidavit
in support of the defendant‟s motion to dismiss
stated that the father told the deputy sheriff that
his son had moved and accepted a new job in
The deputy sheriff filed a return indicating that
service was completed.
The trial court granted the defendant‟s motion to
1. The deputy sheriff‟s return of service
“indicates legal service under Rule
4(j)(1)(a), which results in a presumption
of valid service of process.”
2. “More than a single contradictory affidavit
is required to show improper service.”
Carpenter v. Agee
(NC App 2005) (60)
When the plaintiff filed an affidavit of service by
certified mail and a copy of the signed return
receipt, whether the defendant‟s affidavit stating
that he had not resided at the address shown in
the plaintiff‟s affidavit since 2002 was sufficient to
Suit was filed for injuries received in an
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 defendant‟s
mother at the address to which the summons and
complaint were mailed.
The plaintiff filed an affidavit of service by
certified mail and attached the signed return
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 defendant‟s motion to
1. “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.”
2. “Defendant‟s single affidavit does not rebut the
3. 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.
Rule 9(b) - Alleging Fraud
Bob Timberlake Collections, Inc. v. Edwards
(NC App 2006) (62)
1. When the defendant‟s 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
2. When the defendant‟s counterclaim alleging unfair
and deceptive trade practices stated only that the
plaintiff‟s 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.”
Rule 11 - Sanctions
Hill v. Hill
(NC App 2005) (63)
1. 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 plaintiff‟s attorney would
have produced evidence that there were no
grounds for the fraud allegations.
2. Only the appellate court may award sanctions for
3. Sanctions for conduct during discovery may be
awarded under Rule 11 because they relate to
the insufficiency of the complaint.
4. Sanctions for fees and expenses during
discovery may be awarded after the hearing on
the motion for summary judgment because the
plaintiff‟s Rule 11 violations were not determined
until the summary judgment hearing.
Melton v. Tindall Corp.
(NC App 2005) (65)
1. 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
2. Whether the trial court properly considered the
plaintiff‟s invoking of the Fifth Amendment
privilege against self incrimination in dismissing
After jury in another case found the defendant
liable in the collapse of a pedestrian walkway at
the Lowe‟s 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
Despite discovery requests, motions to compel
and an order compelling production of the
plaintiff‟s 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
The trial judge dismissed all claims under Rules
37 and 41.
1. A trial judge‟s imposition of sanctions
under Rule 37 is reviewed on appeal
for abuse of discretion.
1. “A civil plaintiff who invokes the Fifth
Amendment to thwart discovery
subjects his claim to dismissal.”
Baker v. Speedway Motorsports, Inc.
(NC App 2005) (65)
1. When the plaintiff did not identify an expert
as required by the court‟s scheduling order,
the trial judge did not abuse his discretion in
excluding the expert‟s testimony.
1. 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
Rule 13(a) – Compulsory
Jonesboro United Methodist Church v.
(NC 2005) (70)
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,
Batten entered into a contract with the plaintiff to
construct a fellowship hall.
Disputes arose about the quality of Batten‟s 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.
Batten filed suit in Forsyth Superior Court seeking
$101,000 in damages. The trial court granted
Batten‟s motion for summary judgment, the Court
of Appeals affirmed and the Supreme Court
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 Batten‟s motion and the
Court of Appeals affirmed.
1. Both the Forsyth and Lee County actions
involved allegations about whether Batten had
performed the construction in a satisfactory
2. 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.
Miller v. Forsyth Memorial Hosp., Inc.
(NC App 2005) (72)
When the plaintiff moved to compel documents to
be produced by the defendant that were identified
in the defendant‟s privilege log, and the trial court
denied the plaintiff‟s 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 court‟s 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.
Armstrong v. Barnes,
(NC App 2005), review denied (73)
1. Whether a discovery order involving a
statutory privilege is appealable?
2. Although testimony concerning the
defendant‟s 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?
The complaint alleged medical malpractice arising
from the defendant‟s delivery of the plaintiff‟s
child in February 2000.
During the deposition of the defendant, the
defendant‟s attorney objected and instructed the
defendant not to answer questions about his
history of drug abuse.
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 plaintiff‟s child. In order to obtain
credentialing at the hospital, the defendant had to
appear before the hospital‟s board, which
required the defendant to submit to drug abuse
monitoring. The defendant relapsed during this
period and began using drugs again.
1. Although the discovery order was interlocutory, it involved
assertion of a statutory privilege and was immediately
2. N.C.Gen.Stat. § 90-21.22 protects peer review agreements
such as physicians health programs. The trial court,
therefore, should have granted the defendant‟s motion for
a protective order as to matters privileged under the
The defendant, however, had independent knowledge of his drug
abuse. Although this was the same evidence before the
credentialing hearing, the defendant was the “original source” of the
evidence and could not use the statute “to shield himself from
answering deposition questions regarding the details of his drug
abuse merely because he disclosed those details during the
credentialing committee proceedings.”
Coker v. DaimlerChrysler Corp.,
(NC 2006) (75)
When plaintiffs sought to recover only future
damages and did not allege “concrete and
particularized and actual or imminent” injury and did
not request recovery for personal injury or property
damage, the trial court properly granted the
defendant‟s Rule 12(c) motion for judgment on the
Pineville Forest Homeowners v. Portrait
(NC App 2006) (80)
1. The decision about whether a matter is subject to
arbitration is a matter of law for the trial court.
2. Appellate review of the trial court‟s decision is de
3. In order to conduct appellate review, the trial
judge‟s order must include “findings which sustain
its determination regarding the validity and
applicability of the arbitration provisions.”
4. The trial judge‟s order must include whether “a
valid agreement to arbitrate exists between the
Ellen v. A.C. Schultes, (NC App 2005),
petition for disc. review filed (81)
When construction subcontracts contained a
clause requiring all controversies arising out of or
related to the subcontract to be settled by
arbitration, whether a complaint alleging sexual
harassment, unfair and deceptive trade practices
and interference with prospective business
advantage arising from the failed purchase of the
plaintiff by the defendant was subject to
The individual plaintiffs were shareholders in
Atlantic Coast Construction & Utility (ACCU).
ACCU entered into agreements with Schultes for
the construction of projects awarded to Schultes.
Each of the five construction project contracts
contained a provision requiring arbitration of all
controversies arising out of or related to the
There were negotiations for the purchase of ACCU
by Schultes, but those negotiations were not
Schultes then filed a complaint requiring
arbitration of all claims arising out of the five
subcontracts. The trial court ordered arbitration
of all claims.
The present complaint alleged unfair and
deceptive trade practices, tortious interference
with prospective business advantage and sexual
harassment by an officer of Schultes against one
of the shareholders of ACCU.
The trial court denied Schultes‟ motion to require
arbitration of the present claims.
1. The trial court must first determine whether the
present dispute is covered by the “substantive
scope” of the agreement to arbitrate, then
determine whether the parties had a valid
agreement to arbitrate.
2. In the present case, the plaintiffs are not seeking
benefits from the five subcontracts.
3. The present claims of unfair and deceptive trade
practices and tortious interference with contract
do not depend upon the five subcontracts.
4. Therefore, the plaintiffs cannot be required to
arbitrate the present claims.
Brown v. Centex Homes
(NC 2005) (83)
When the plaintiff and defendant entered into a
contract requiring arbitration, whether the
agreement extended to an agent of the
defendant, thereby barring suit against the agent?
The plaintiffs worked with Ms. Kroening to
purchase a home owned by Centex.
The plaintiffs asked Ms. Kroening whether there
were any plans to develop the adjoining wooded
area. Ms. Kroening replied that there were no
plans to develop the area.
At the time of these discussions, a shopping
center with a Wal-Mart store had been approved
for the wooded area adjoining the home that was
purchased by the plaintiffs.
The contract for the purchase of the home
contained an arbitration clause.
When the plaintiffs sued Centex and Ms. Kroening,
the trial court granted the motion of Centex to
compel arbitration. However, since Ms. Kroening
was not a party to the arbitration agreement, the
trial court denied her motion to compel arbitration.
1. Although Ms. Kroening did not sign the contract,
“her status as an agent of Centex affords her
the right of arbitration.”
2. The basis of the plaintiffs‟ claims relate to Ms.
Kroening‟s representation as an agent of Centex.
In order to recover against Centex, the plaintiffs
must show that Ms. Kroening was acting as the
agent of Centex.
Moose v. Versailles
(NC App 2005) (84)
1. An order denying arbitration is immediately
appealable because a substantial right may be
lost if appellate review is denied.
2. When defendant‟s initial answer did not contain
a demand for arbitration and defendant engaged
in discovery including interrogatories, requests
for documents and defendant‟s subsequent
amended answer contained a demand for
arbitration, defendant waived the right to
Rule 68 – Offers of Judgment
Ennis v. Henderson
(NC App 2006) (85)
The trial court has no authority and no discretion
under Rule 68 or Rule 6(b) to extend the ten-day
period for acceptance of an offer of judgment.
Unlike complaints and discovery, offers of judgment
do not require a response from the adverse party.
If the offer is not accepted within ten days, it is
automatically rescinded by Rule 68.
G.S. §§ 6-18, 6-19 and 6-20
– Court Costs
Morgan v. Steiner
(NC App 2005) (87)
1. On appellate review of the award of court costs,
the Court of Appeals determines first whether the
costs are identified in G.S. § 7A-305(d). If the
costs are not identified in Chapter 7A, the Court
then determines whether the costs are “common
law costs.” If so, the standard of review on appeal
is abuse of discretion.
2. Deposition costs – although these costs are not
listed in Chapter 7A, they are common law costs
permissible under G.S. § 6-20.
3. Medical records – It was error to award these
costs. They are not identified in Chapter 7A.
There is no common law ground to allow.
4. Expert witnesses at trial – These costs may be
awarded under G.S. § 7A-305(d) if the witness is
under subpoena. The statute limits the number of
expert witnesses to two testifying on the same
issue. The trial court erred by allowing fees for
meeting with counsel before trial and reviewing
5. Trial exhibits - There is a division among panels of
the Court of Appeals. These costs are not
identified in Chapter 7A and there is no common
law basis to award.
G.S. § 97-10.2(j) –
Workers‟ Compensation Liens
Helsius v. Robertson
(NC App 2005) (88)
Whether the trial court properly exercised its
discretion and “reasoned choice” when it
extinguished the employer‟s workers‟
The plaintiff was injured in the course and scope
of his employment.
The employer paid workers‟ compensation benefits
The plaintiff recovered the limits of the tortfeasor‟s
liability insurance policy of $30,000 and his
underinsurance policy of $20,000 for a total
recovery of $50,000.
The trial court extinguished the employer‟s lien.
1. The trial court made extensive findings of fact
and conclusions of law as suggested by Allen v.
2. The trial judge considered the plaintiff‟s injuries
and expenses, future medical treatment,
permanent injury and total recovery.
3. The trial judge properly evaluated: (1) the
employer paid only two-thirds of the lost wages;
(2) no payment for secondary employment; (3)
workers‟ compensation did not pay for pain and
suffering; and (4) allowing recovery for the lien
would eliminate the separate recovery from the
Childress v. Fluor Daniel, Inc.
(NC App 2005) (90)
Whether the superior court had jurisdiction
under G.S. § 97-10.2(j) to set the amount of
the workers‟ compensation lien?
The plaintiff received an award from the Industrial
Commission of $20,000 for each of three internal
organs damaged by exposure to asbestos.
On the plaintiff‟s appeal to the Court of Appeals,
the Court held that the Industrial Commission did
not have jurisdiction to address distribution of the
award and the interests of third parties until there
had been a final award.
The plaintiff then filed a motion in the superior
court to distribute the settlement proceeds and
reduce the defendants‟ lien. The trial court held
that it did not have jurisdiction.
Pursuant to G.S. § 97-10.2(j), the superior
court, in its discretion, determines whether to
order any reduction in the workers‟
In a separate proceeding under G.S. § 97-
10.2(f)(1), the Industrial Commission then issues
an order specifying to whom and in what
amounts the funds will be distributed to satisfy
the workers‟ compensation lien, if any.
Therefore, G.S. § 97-10.2(j) “explicitly gives [the
superior court] jurisdiction over settling the
amount of the lien.”
G.S. § 66-152 – Trade Secrets
Sunbelt Rentals v. Head & Engquist
(NC App 2005) (91)
1. Whether compilation of business information
such as customer pricing, employee salaries,
budget information and business organization
which is protected, not known outside the
business, competitively valuable, and developed
at considerable cost may constitute a trade
secret under N.C.G.S. § 66-152?
2. When the plaintiff introduced evidence that the
defendant (a) knew or should of known of the
trade secret and (b) had the opportunity to
acquire or disclose the trade secret without the
consent of the owner, whether this was sufficient
evidence of misappropriation of the trade
3. When the plaintiff‟s evidence established that its
former employees were used by the defendant
to solicit current employees and customers of
the plaintiff and this conduct resulted in a loss of
business to the plaintiff, whether this was
sufficient evidence to establish a claim under
Sunbelt and H & E were competitors in the market
for construction equipment, particularly aerial
Sunbelt purchased BPS Equipment.
Hepler and Kline were employed by BPS. After
BPS was acquired by Sunbelt, Hepler and Kline
went to work for H & E.
Hepler and Kline recruited former managers of
BPS to work for H & E performing the same
responsibilities they had done at BPS.
Sunbelt sued H & E for violations of the North
Carolina Trade Secrets Act and the North Carolina
Unfair Trade Practices Act.
The trial court entered judgment for Sunbelt for
$5 million, then trebled that amount under G.S.
§ 75-16 and awarded the plaintiff attorneys‟ fees
of $1.2 million.
1. Compilation of business information such as
customer information, pricing, employee
salaries, budget information and business
organization may constitute a trade secret
when such information is (a) not generally
known outside the business; (b) protected
within the company; (c) competitively
valuable; (d) developed at significant cost;
and (e) difficult to duplicate or acquire.
2. Proof of misappropriation of a trade secret is
established by “substantial evidence”
showing that the defendant (a) knew or
should have known of the trade secret; and
(b) had the opportunity to acquire or disclose
it without the consent of the owner.
HELD: Affirmed (Cont‟d.)
3. Evidence sufficient to support an award under
Chapter 75 is established by: (a) the defendant
had no customers in the geographic area until
recruiting managers of the plaintiff; (b) during
the period involved, the defendant generated
$3.7 million in new business with a corresponding
loss to the plaintiff; (c) the defendant solicited
key personnel from the plaintiff; and (d) the
defendant‟s conduct “devastated rather than
competed with” the plaintiff.
4. The trial court properly permitted the plaintiff‟s
economic expert to testify when the expert‟s
opinion as to damages was based on (a) lost
profits and (b) lost market share resulting from
the defendant‟s “accelerated entry” into the
G.S. § 75-1.1 – Unfair and
Deceptive Trade Practices
Willen v. Hewson
(NC App 2005) (94)
1. When the plaintiffs specifically inquired about a
material fact relating to the sale of land and the
defendant concealed the true facts in
responding, whether this was sufficient to
2. Whether the sale of one residence for profit was
a sufficient basis for a Chapter 75 claim?
The plaintiffs purchased land and a house from
the defendant for $938,165.
During the pre-purchase negotiations, the
plaintiffs told the defendant that they intended to
raise their four small children on the property.
When the plaintiffs were told by the defendant‟s
niece that there had been problems on the
property with trespass and vandalism, they
inquired about this of the defendant.
The defendant denied that these problems
After the plaintiffs moved onto the property, they
had continuing problems with vandalism and
trespass and learned that these problems had
existed for several years.
The trial court found that the defendant was aware
of the history of trespass and vandalism and
withheld these facts from the plaintiffs.
The trial court also found that this conduct
constituted unfair and deceptive trade practices.
Judgment was entered for $322,753 and attorneys‟
fees of $55,000.
1. Even if there is no duty to disclose information, when the
defendant does respond, the answer must be “a full and
fair disclosure of the matters he discloses.”
The information about trespass and vandalism was a
material fact which the defendant deliberately concealed.
The plaintiffs would not have purchased the property if
they had known the true facts.
2. The sale of the property constituted a claim under Chapter
75. The defendant was not selling her own residence.
She had purchased the property two months earlier for
$685,000 and was “motivated by the potential for profit.”
Johnson v. Colonial Life & Acc. Ins. Co.
(NC App 2005) (96)
1. When the aggravating factors submitted to the
jury as a basis for the Chapter 75 claim are also
conduct which constitutes breach of contract,
whether it is proper to find that the aggravating
factors are a part of unfair and deceptive trade
practices and treble the breach of contract
2. Whether prejudgment interest may be added to
the breach of contract damages before trebling
under Chapter 75?
The plaintiff sued his former employer for
termination of the employment without cause.
The jury returned a verdict for the plaintiff and
awarded $537,887 for breach of contract.
The jury found two of three aggravating factors
relating to the breach of contract.
On the plaintiff‟s claim for intentional infliction of
emotional distress, the jury awarded $1,075,774.
On motion of the plaintiff, the trial judge ordered
that the two aggravating factors found by the jury
established the defendant‟s unfair and deceptive
trade practices and entitled the plaintiff to treble
damages and attorneys‟ fees.
Judgment was entered for:
Breach of contract - $537,887
Prejudgment interest on the breach of contract claim -
Adding the breach of contract claim and prejudgment
interest, then trebling - $2,506,344.06
Total award, including, also intentional infliction of
emotional distress and COBRA violations - $4,138,276.92
1. The trial judge properly found that the breach of contract
aggravating factors constituted unfair and deceptive trade
practices. The aggravating conduct was part of the
continuing breach of contract by the defendant.
The Court of Appeals agreed with the general statement
that “a mere breach of contract, even if intentional, is not
sufficiently unfair or deceptive” on which to base a Chapter
“The jury returned the verdict finding aggravating factors . .
. to be present. Mr. Johnson presented evidence that false
accusations were deceptively made against him as a pre-
text forming the basis of termination and the jury agreed.
Therefore, where the jury found that there was a breach of
contract accompanied by aggravating factors, it was proper
for the judge to conclude as a matter of law that a claim
under N.C.Gen.Stat. § 75-1.1 had been satisfied.”
2. It was error to add prejudgment interest to the
breach of contract claim before trebling under
N.C.G.S. § 75-16 provides that the amount to be
trebled is that fixed by the verdict. Therefore,
the amount to be trebled is only the “actual
damages awarded for the breach of contract
that was found to be an unfair trade practice.”
3. It was error to submit the claim for intentional
infliction of emotional distress to the jury.
The plaintiff‟s evidence for this claim was that
“threats” and “accusations” were made to the
plaintiff about losing his job and health
insurance. Although the comments made were
“insulting and offensive” to the plaintiff, they
were not so “agregious as to go „beyond all
possible bounds of decency.‟”
4. COBRA claims are within the exclusive
jurisdiction of the federal courts. It was error to
submit this claim to the jury.
Excel Staffing Service, Inc. v.
HP Reidsville, Inc.
(NC App 2005) (99)
“The mere establishment of a subsidiary
corporation for the purpose of limiting the
parent corporation‟s liability is not per se
an unfair and deceptive trade practice
under Chapter 75.”
Jury Instructions –
N.C.P.I. – Civ 102.20
Hughes v. Webster
(NC App 2006) (101)
1. If the defendant‟s negligent acts would have breached a
duty to a person of ordinary susceptibility, whether an
instruction on peculiar susceptibility should be given to the
effect that the defendant is liable for all damages to the
plaintiff notwithstanding the fact that the plaintiff‟s
damages were unusually extensive because of the
plaintiff‟s peculiar susceptibility?
2. Whether the trial court properly excluded the plaintiff‟s
expert from testifying when (a) the expert‟s opinions
changed after he was deposed and there was no
supplemental disclosure; and (b) the expert was testifying
outside his area of experience and basing his opinion on
the report of another expert?
The parties stipulated that the defendant
pharmacist filled the plaintiff‟s prescription with
the wrong drug.
The only issue tried was whether the plaintiff was
injured by the defendant‟s negligence.
The plaintiff was hospitalized three times before
the prescription error was discovered.
During the first hospitalization, the plaintiff
sustained damage to his heart and suffered a
The trial judge refused to instruct on peculiar
The jury awarded the plaintiff $50,000.
1. When an instruction on peculiar susceptibility is
warranted, failure to so instruct is reversible error.
Generally, when the defendant‟s conduct would not have
resulted in injury to an ordinary person, the defendant is
not liable for injury to a person of peculiar susceptibility
unless the defendant was on notice of the condition.
However, if the defendant‟s conduct was a breach of duty
to a person of ordinary susceptibility, then the defendant
is liable for all damages “notwithstanding the fact that
these damages were unusually extensive because of
There was evidence that an ordinary person would have
been injured by the toxic effects of the drug given in error
to the plaintiff.
HELD: Reversed (Cont‟d.)
There was also evidence that the plaintiff‟s heart damages
and stroke were caused by a “hypersensitive drug
An instruction on peculiar susceptibility should have been
2. The trial judge properly excluded the plaintiff‟s expert.
The expert‟s opinion on causation changed between the
time of his deposition and trial. Since the pretrial order
required disclosure of all expert opinions, the opinion was
Additionally, the expert conceded that he was testifying in
an area in which he was not an expert and was basing his
opinion on the report of another expert.
Evidence – Experts
NC Dept. of Transp. v. Haywood County
(NC 2006) (105)
When the defendant‟s experts had experience in
appraising real property, but could not articulate
the method used to arrive at their opinions and
stated that the opinions were based on feelings
and personal opinions, the trial judge‟s decision to
exclude the experts was “neither arbitrary not the
result of an unreasoned decision” and was not an
abuse of discretion.
Banks v. Dunn
(NC App 2006) (106)
1. Where the factual issue was whether water flowed
downhill and will carry loose material in its flow,
expert evidence was not required.
2. The flooding in the plaintiff‟s yard did not involve a
“scientific principle more complex than the truism
that water flows downhill and will carry loose
material with it.”
3. Unlike Davis v. City of Mebane, the present case
did not involve a large scale water project, the
interaction of water currents, the calculation of
water flow rates and the boundary of a 100 year
Van Reypen Associates, Inc. v. Teeter, review
(NC App 2006) (108)
In allowing the defendant‟s motion for summary
judgment, whether the trial court:
1. Properly considered an affidavit of the defendant
stating his speed at the time of the accident; and
2. Properly excluded the opinion of the plaintiff‟s
expert as to the speed of the defendant‟s vehicle at
the time of the collision?
The plaintiff alleged that excessive speed of the
defendant caused a collision.
The defendant moved for summary judgment. In
support of the defendant‟s motion for summary
judgment, the defendant‟s affidavit was attached
in which the defendant stated that he was driving
35 mph at the time of the accident.
In opposition to the defendant‟s motion for
summary judgment, the plaintiff attached the
affidavit of David Brown, a professional engineer.
Brown stated that it was his expert opinion that
the defendant was traveling 48 mph at the time
of the accident and that the defendant‟s
negligence was the cause of the accident.
The trial court granted the defendant‟s motion for
1. It was proper to consider the defendant‟s
affidavit as to his speed.
Even though the defendant was an interested
witness, there was nothing in his affidavit
“inherently suspect and the facts contained in
the affidavit were not peculiarly within his
Nothing in the affidavit raised a question about
the defendant‟s credibility.
HELD: Affirmed (Cont‟d.)
2. The trial court properly excluded the opinions of
the plaintiff‟s expert engineer as to the
defendant‟s speed at the time of the collision.
“It has long been the rule in North Carolina that
„one who did not see a vehicle in motion will not
be permitted to give an opinion as to its speed.‟”
State v. Edwards
(NC App 2005) (109)
1. In a trial for first-degree murder, the trial court
did not abuse its discretion when it refused to let
the defendant‟s expert psychiatrist testify about
conversations the psychiatrist had with the
2. Although such evidence may be admissible under
Rule 705, the State did not examine the expert
about the basis for his opinion.
3. The excluded conversations related to the
defendant‟s remorse, but this was not relevant
to the issue of the defendant‟s ability to
premeditate and deliberate.
4. The trial court allowed the expert to testify
about the matters relied upon in reaching his
opinion, excluding only the defendant‟s words.
State v. Bunn
(NC App 2005) (110)
1. In a trial for possession of intent to sell marijuana
and cocaine, the trial court properly permitted the
State‟s expert to testify concerning the opinions of
non-testifying experts relied upon by the testifying
2. “Testimony as to information relied upon by an
expert when offered to show the basis for the
expert‟s opinion is not hearsay.”
3. “An expert may properly base his or her opinion on
tests performed by another person, if the tests are
of the type reasonably relied upon by experts in
Elliott v. Muehlbach
(NC App 2005) (111)
When the plaintiff‟s expert did not personally
observe the conditions about which he
expressed an opinion, whether the trial court
abused its discretion in permitting the expert
The plaintiff sought to enjoin as a nuisance
the operation of an ATV racetrack.
At the hearing on the plaintiff‟s motion for a
preliminary injunction, the plaintiff‟s expert,
Dr. Noral Stewart, testified as an expert in
acoustics and noise control.
The defendant objected to the opinion of
Dr. Stewart because he had not personally
heard any of the sounds about which he
expressed an opinion.
The court granted the plaintiff‟s motion for
a preliminary injunction.
Rule 703 requires only that the matters relied
upon by the expert be “of a type reasonably
relied upon by experts in the particular field.”
Dr. Stewart testified that he: (1) viewed the
track; (2) reviewed photographs of the area;
(3) listened to recordings of the sound made by
the ATVs; and (4) discussed the racetrack with
several of the plaintiffs.
Defendant offered no evidence that this “was an
inadequate basis under Rule 703.”
These questions go to the weight of the
testimony rather than admissibility.