The June 8th opinion from Business Court Judge Judge Gale in Best Cartage, Inc. v. Stonewall Packaging, LLC, 2011 NCBC 15, dismissed the Plaintiff’s complaint, finding its allegations that an alleged partner should be liable for the partnership debts, or otherwise liable on a veil piercing basis, were insufficient to state a valid claim.
The Fourth Circuit On Recusals And Pro Hac Vice Admissions
We all sometimes say things that we are sorry to have said. Even judges. Those types of statements by a District Court Judge in South Carolina, which the Fourth Circuit called "neither wise nor temperate" were the subject of a recusal motion ruled on last week by the Fourth Circuit, in Belue v. Aegon USA, Inc. The Court also discussed the circumstances under which a pro hac vice admission can be withdrawn, taking issue with the trial judge’s revocation of that status.
The comments by Judge Anderson of the District of South Carolina were made in connection with a hearing in a class action matter. He criticized a related settlement in another jurisdiction as possibly being one "of those buddy settlements we have to watch out for." He was also critical of the defendants’ approach in another case and suggested that the settlement in that case had been "improper."
This prompted the defendants’ lawyers to file a motion to recuse Judge Anderson pursuant to 28 U.S.C. sec. 455 (b)(1), which requires recusal when a judge "has a personal bias or prejudice concerning a party, or personal knowledge of disputed evidentiary facts concerning the proceeding."
The Judge’s reaction to the motion to recuse was fiery. He said it was the defense counsel’s reaction to negative rulings, saying "you lose the case and attack the judge." He called the request for recusal "the most inappropriate motion in the world."
Judge Wilkinson, writing for the Fourth Circuit, said that recusals based on in-trial conduct generally involved "singular and startling facts." He noted that the Supreme Court has said that the bias should stem from a source outside of the judicial proceeding, usually requiring an "extrajudicial source."
The Fourth Circuit called the recusal motion "decidedly ill founded." Judge Wilkinson said that "strong views" expressed by a judge about a case were not grounds for recusal, stating that:
Litigation is often a contentious business, and tempers often flare. But to argue that judges must desist from forming strong views about a case is to blink the reality that judicial decisions inescapably require judgment. Dissatisfaction with a judge’s views on the merits of a case may present ample grounds for appeal, but it rarely — if ever — presents a basis for recusal.
Op. p.15.
The opinion expresses a general disfavor of recusal motions, saying that they should not "become a form of brushback pitch for litigants to hurl at judges who do not rule in their favor," and that "no appellate court can afford to leave trial judges prey to a slew of groundless calls for recusal from litigants whose major objection to those judges appears to be a perceived disagreement with them."Continue Reading The Fourth Circuit On Recusals And Pro Hac Vice Admissions
Business Court Sifts through Warranty Claims Based On Asset Purchase Agreement
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The Business Court yesterday sifted through cross motions for summary judgment brought by the seller and buyer of a business selling "power protection devices used primarily to control power surges and to provide power filtration in high volume office equipment." Op. ¶12. The case turned on the application of New York law, which the APA
Fourth Circuit Gives Win To Franchisor Seeking Lost Profits From Terminated Franchisee
The Fourth Circuit on Thursday sided with a franchisor in its efforts to recover prospective damages under North Carolina law, including lost profits, from a franchisee which it had terminated. Franchisors seeking such damages should find joy in Meineke Car Care Centers, Inc. v. RLB Holdings, LLC, in which the Court said it was
Business Court Orders Japanese CEO To Appear In the U.S. For Deposition
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example, where and when will the officers of an out of state corporate defendant appear for their depositions. And what about an out of country defendant? Can you make their representatives appear in the United States for a deposition if you can’t persuade opposing counsel to
Business Court Condemns “Stinky Fees” Paid To Lawyers Suing Over Merger Transactions
In one of his final actions as a Business Court Judge, Judge Tennille threw down the gauntlet for lawyers representing class action plaintiffs who are seeking approval of settlements. Last week in Ward v. Lance, Inc., Judge Tennille condemned what he called "stinky fees," which he said "just smell bad and have no economic
North Carolina Court Of Appeals: Bright Stars and Letters of Credit
The Court of Appeals on Tuesday of last week, in Speedway Motorsports Int’l Ltd. v. Bronwen Energy Trading, Ltd., unwound a year old decision by the Business Court. In that decision, Judge Diaz had ruled that a Defendant bank which had issued a letter of credit was bound to litigate in Switzerland a crossclaim
North Carolina Business Court: Department Of Revenue Violated State Constitution In Attempting To Collect A Tax Penalty
The Business Court spanked the Department of Revenue again last week, just after a ruling two weeks ago when it said in another case that the DOR’s position was "harsh, and potentially fatal. . . ." This time, in Delhaize America, Inc. v. Lay, 2011 NCBC 2, Judge Tennille ruled that the attempted imposition of
The Business Court’s First Opinion in 2011
I have been puzzling for the last three days on what to write about the Business Court’s first opinion of the year, in Technocomm Business Systems, Inc. v. North Carolina Department of Revenue, 2011 NCBC 1. It involves an opinion about the sales and use tax and whether the taxpayer (Technocomm) was entitled to a refund.
You might be wondering: what is The Business Court doing writing about sales and use taxes? The answer is that in 2008, the Business Court became the route of review for tax cases decided in the Office of Administrative Hearings by an Administrative Law Judge. This was the first opinion from the Court acting in its judicial review capacity in a tax case.
What standard of review applied? Since it was a question of law, the standard of review was de novo. That meant that Judge Tennille could "freely substitute [his] own judgment for the [ALJ’s] judgment." Op. ¶28. And he did that.
Who won? The Department of Revenue or the taxpayer? Judge Tennille reversed the determination by an ALJ and remanded the case for the ALJ to determine the amount of a tax credit due Technocomm which the DOR had refused to allow. Along the way, he condemned the Department’s position as "harsh at best and potentially fatal at worst." Op. ¶25
What was the basis for the credit claim? Technocomm said it was due a credit against use taxes as a result of sales taxes it had collected from its customers in error, and which it had remitted to the DOR. The sales taxes had been collected in connection with service agreements sold by Technocomm simultaneously with the sale of office equipment. The agreements included parts and supplies estimated by Technocomm to be necessary for it to fulfill its maintenance obligations.
Technocomm had been told by the DOR in 1999 following an audit that it should not collect sales tax on its service agreements. The Department said that Technocomm should pay a use tax based on the dollar value of the actual parts and supplies used to meet its service obligations. But Technocomm disregarded that instruction, and continued to charge its customers the estimated sales tax in what it conceded to be "bad business practice." Op. ¶23.
The department and Technocomm were at war over which section of the state tax law applied: section 105-164.41 (titled Excess payments; refunds) or section 105-164.11 (titled excessive and erroneous collections). After some statutory construction of how to deal with the conflict between a general and specific statute, and the obligatory Latin phrase generalia specialibus non derogant (general words do not derogate from special), the Court applied the more general provisions of 164.41 which says that when excess tax is paid "then the amount in excess shall be credited against any tax . . . then due from the taxpayer."
Now, wait a minute, you might say. Isn’t Technocomm generating this credit from money paid by 
its own customers? Shouldn’t they, as opposed to Technocomm, get the credit since they provided the dollars that will result in the credit? Judge Tennille covered that point extensively, in Paragraphs 40 through 53 of the Opinion. The bottom line, as I saw it, was that the service agreements allocated the risks and costs of repair in advance between Technocomm and its customers. Technocomm carried the risk of having to provide more parts and supplies than it had anticipated and built into the cost of the service agreement.
Part of the cost of that repair risk flows from a human trait observed by Judge Tennille in my favorite part of the Opinion:Continue Reading The Business Court’s First Opinion in 2011
Don’t Try This In The Office: Enforcing An Option That Isn’t Specific As To Price
The Option ruled on by the Business Court yesterday in NRC Golf Course, LLC v. JMR Golf, LLC, 2010 NCBC 20, said that the Plaintiff had the option to purchase a golf course for “fair market value at exercise date validated by an independent third-party appraisal."
Plaintiff offered $750,000, which was the value for the golf course