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Mack Sperling

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I’m a business litigator in North Carolina, with Brooks Pierce McLendon Humphrey & Leonard, LLP.

I grew up in New York, went to college there (at Union College in Schenectady), and then came to North Carolina to law school at UNC-Chapel Hill. I clerked for United States District Judge Frank Bullock of the U.S. District Court for the Middle District of North Carolina after graduating, and then joined Brooks Pierce.

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Have you ever billed a client nearly $65,000 for pursuing a motion to compel? Maybe you routinely handle mega-cases and you aren’t goggled by the size of that kind of fee  But that was the amount of the fee sought last month, in Out of the Box Developers, LLC  v. Logicbit Corp. following Plaintiff’s win on a motion for sanctions growing out of a discovery dispute.  It was sizeable enough to catch my attention.

The case is about the Defendants’ alleged theft of Plaintiff’s customizations to its case management software.  The Defendants’ product, aimed at  use by bankruptcy attorneys, is marketed under the name HoudiniEsq.   During discovery, Plaintiff requested production of the version of HoudiniEsq used by one of the Defendants in May 2010, which would have allowed Plaintiff to isolate the customization to the software as of that time.

Despite an April 12, 2013 Order from the Court directing the production of that version of the software, the two Defendants at which the Order was directed — The Doan Law Firm and Doan Law, LLP — failed to comply.  Judge Gale ruled in 2013 NCBC 32 that there was no justifiable reason for the noncompliance. Op. 41.  He found it egregious enough to warrant the "severe sanctions" allowed by Rule 37(b)(2) of the North Carolina Rules of Civil Procedure.  Op. 44.

Instead of imposing those severe sanctions — like striking pleadings or barring the Defendants from defending against a claim as allowed by Rule 37(b)(2) —  Judge Gale ruled that the Plaintiff should be reimbursed its "reasonable costs and expenses" associated with the several motions to compel made necessary by the Doan Defendants’ failure to produce the software.

The issue of the reasonableness of the costs and expenses was decided by the Business Court in 2013 NCBC 34.  Plaintiff’s lead counsel had filed an Affidavit requesting an award of $63,714.57.  That was based on fees the fim had billed for three motions to compel and the hearing for sanctions which led to the Court’s final discovery ruling.

Continue Reading Business Court Awards $38,000 In Fees For Opposing Party’s Failure To Comply With Discovery Order

You probably know that North Carolina is an employment-at-will state.  That means that in the absence of any employment contract, you can be fired from your job at any time, for good reason, no reason at all, or even a bad reason.

There’s a skinny exception to that rule: that an employee cannot be terminated…

It’s hard to conceive of a more unlikely Business Court case than Keister v. National Council of the Young Men’s Christian Assocation of the United States of America, a purported class action by YMCA members.  The Opinion, 2013 NCBC 36,  was issued late last week.

Keister and his family joined the YMCA in Asheville…

Let’s say you are a corporate lawyer.  You spend your pitiful and lonely life surrounded by marked up papers and red pens, drafting or revising agreements.  You send your final versions out to your clients to sign, with those annoying little "sign here" stickers.

Then, the big day finally comes.  Your work is in court and the case…

The issue in Johnson v. American United Life Insurance Co., decided last week by the Fourth Circuit. was whether the Plaintiff’s husband’s death from a car wreck while driving intoxicated was an "accident" under his life insurance policy from Defendant American United which provided "Accidental Death and Dismemberment" coverage .

The policy didn’t contain a definition for an "accident," making it necessary for the Court to interpret the term. It noted in passing that     "[t]here are probably not many words which have caused courts as much trouble as ‘accident’ and ‘accidental.’" Op. at n.1.

In the end, Judge Traxler ruled that the dead husband was covered by the policy, though he said that:

Reaching this result gives us no great pleasure. Drunk driving is reckless, irresponsible conduct that produces tragic consequences for the thousands it touches annually. But our task in this case is not to promote personal responsibility or enforce good driving habits. We must focus on the terms of the policies issued under the Plan and determine whether Richard died as a result of an accident without ‘allowing our moral judgments about drunk driving to influence our
review.’

Op. 3-4.

The Court’s analysis began with two competing definitions of the term "accident."  The Plaintiff argued that the "most natural and common understanding of the term . . . is an unintentional, unplanned incident that occurs as a result of a careless error."  Op. at 12.  She said that unless an intoxicated driver intended to crash his car and die, that his death would be an accident under the policy.

Another definition of "accident" would "exclude any incident where the consequences of intentional conduct are expected or reasonably forseeable."  Op. at 13.

Finding the term ambiguous, the Court applied "the rule of contra proferentum and construed the term[] strictly in favor of the insured." Op. at 15.   It found no evidence that the driver intended to have an accident and deemed the insured’s death to be an accident.

The District Court had ruled that a death caused by intoxication was not an "accident."  It relied on Section 58-3-30(b) of the North Carolina General Statutes, which says that

"Accident", "accidental injury", and "accidental means" shall be defined to imply "result" language and shall not include words that establish an accidental means test.  "

You might not be familiar with some of those terms.  I wasn’t.  The "accidental means" definition provides that there is no coverage when the loss "occurs by reason of an insured’s intentional act" or "is the natural and probable consequence of a voluntary actor course of conduct."  Op. at 21 (quoting Collins v. Life Ins. Co. of Va., 393 S.E.2d 342, 343 (N.C. Ct. App. 1990)).

The "accidental result" standard is more liberal. 

a policy that pays benefits based on an ‘accidental result’ standard does not categorically exclude from the definition of ‘accident’ losses resulting from intentional acts; rather, "accidental" under this standard means a loss occurred ‘fortuitously without intent or design’ and was ‘unexpected, unusual and unforeseen.’

Op. at 21 (quoting Henderson v. Hartford Accident & Indem. Co., 150 S.E.2d 17, 20 (N.C. 1966)).

Judge Traxler looked to a 1992 North Carolina Supreme Court decision — North Carolina Farm Bureau Mutual Ins. Co. v. Stox, 412 S.E.2d 318 (N.C. 1992) — which held:

Continue Reading The Fourth Circuit On “Accidents” And Drunken Driving