In this legal malpractice action, the plaintiff alleged that the defendant law firm had failed to comply with "standards established by the Rules of Professional Conduct promulgated by the North Carolina State Bar." The Court granted a Motion to Strike with regard to this language, observing that "the Rules of Professional Conduct of the North
Mattress Now, Inc. v. KS Bank, Inc., September 2, 2008 (Tennille)
Plaintiff sued the Defendant Bank for allegedly allowing improper deposits of company checks into a personal account. The Bank designated the case to the Business Court based on its jurisdiction over cases involving "the law governing corporations, partnerships, limited liability companies, and limited liability partnerships."
The Plaintiff moved to remand, arguing that the case involved nothing more
The Practice Of “Litigation Funding” Gets A Chilly Reception From The North Carolina Court Of Appeals
Today, the North Carolina Court of Appeals allowed a plaintiff to proceed with her lawsuit that "litigation funding," the practice by which private firms make advances to plaintiffs involved in litigation in exchange for a substantial return in the event of a successful result, violates the law of North Carolina. Reversing the trial court, the Court of Appeals let stand claims for usury, unfair and deceptive practices, and a violation of the North Carolina Consumer Finance Act. The Court threw out, however, claims that this practice constitutes "unlawful gaming" and champerty.
In the case of Odell v. Legal Bucks, LLC, the litigation funder had advanced Ms. Odell $3,000 for her motor vehicle accident claim. Ms. Odell ultimately settled her claim for $18,000, but found that the terms of her agreement required her to pay Legal Bucks $9,582, or more than triple the advance that she had received. Ms. Odell, certainly unhappy at having to give up more than half of her recovery, then sued Legal Bucks, seeking class certification on her multiple claims.
The principal argument of Legal Bucks against the usury claim was that Ms. Odell was not under an absolute obligation to repay the money she had been advanced, and that the arrangement between them was therefore not usurious. The Court recognized that the litigation funding was not a "loan," because a "loan" carries the requirement of an unconditional obligation to repay principal, but held that N.C. Gen. Stat. §24-1.1 also covers "advances," which do not have the same requirement. The Court found that the agreement between the parties demonstrated an understanding that the principal of the advance would be returned, meeting a key element of the test for usury. The Court further found that there was no dispute "that the rate of interest provided for in the Agreement substantially exceeds that permitted" by the statute, and that Legal Bucks had "intentionally entered into a contract to receive a greater amount of interest that that allowed" by law.
Since Legal Bucks wasn’t licensed under the Consumer Finance Act, that made out a violation of the Act, as did its violation of the usury statute. The unfair and deceptive practices claim also went forward, over Legal Bucks’ objection that the terms of the agreement had been fully disclosed to the plaintiff. The Court held that:
"violations of statutes designed to protect the consuming public and violations of established public policy may constitute unfair and deceptive trade practices." In this regard, we note that it is a "paramount public policy of North Carolina to protect North Carolina resident borrowers through the application of North Carolina interest laws." N.C. Gen. Stat. § 24-2.1 (2003). [The] [d]efendants’ practice of offering usurious loans was a clear violation of this policy.
Court of Appeals Rulings Today (September 2, 2008)
The North Carolina Court of Appeals ruled today on cases involving the statute of repose applicable to legal malpractice actions, fiduciary duties of trustees, and the waiver of the right to arbitration.
On the fiduciary duty issue, the Court affirmed the decision of the Business Court in Heinitsh v. Wachovia Bank on an obscure point of
Lightning Strikes: The North Carolina Supreme Court Rules In A Piercing The Corporate Veil Case
Today, the Supreme Court ruled in State ex rel. Cooper v. Ridgeway Brands Mfg., LLC that a claim for piercing the corporate veil could proceed against the individual shareholders of the corporate defendant.
The opinion makes clear the standard that North Carolina applies in such cases, but more significantly resolves an question on the
Some Meaty (But Not North Carolina) Court Decisions On Business Issues
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This post is about three significant business decisions from courts in other jurisdictions. They involve an issue of attorney-client privilege for limited liability companies, whether an LLC member can waive his statutory right to seek dissolution of an LLC, and board duties in a merger context.
First, if there’s litigation between a member-manager of an LLC and
Expert Witnesses And Hot Tubs
I got an email invitation today to a seminar where one of the speakers will be speaking on "hot tubbing" with expert witnesses. I decided immediately that I would need to hire better looking experts in the future if this was going to catch on.
In all seriousness, it turns out that "hot tubbing" of experts had its origin in Australian courts, and it is becoming something of a "hot" subject here in the U.S. There’s an article in ABA Journal about it, and also an article in the New York Times.
What it means is that all of the experts on a particular subject are sworn in at the same time, and then sit as a panel to be examined jointly by the lawyers for the parties and the Court. The procedure even allows for one expert to question another expert directly.
Given the way the procedure works, it makes sense that hot tubbing is also known as "concurrent evidence." If you are interested in exactly how this procedure works, you can keep reading below.Continue Reading Expert Witnesses And Hot Tubs
No Unfair And Deceptive Practices Claim In Dispute Between LLC Members
Reid Pointe, LLC v. Stevens, 2008 NCBC 15 (N.C. Super. Ct. August 18, 2008).
The Business Court today threw out, on a Motion for Judgment on the Pleadings, an unfair and deceptive practices claim stemming from a dispute between members of a limited liability company. The Reid Pointe, LLC v. Stevens case also
A Summary Of Tortious Interference With Contract Cases In The North Carolina Business Court
I’m writing this post about the Business Court’s past decisions involving tortious interference with contract because "tortious interference" is one of the most common searches leading readers to this blog.
So, here’s a summary of more than a dozen Business Court decisions which involve that tort, with links to the summaries of the cases on this blog, which
Judge Tennille On Ethical Issues In Electronic Discovery
There was an article in the ABA Journal a few months ago about the Judges who are the "rock stars" of electronic discovery issues. Two of those Judges, Paul Grimm of the District of Maryland and David Waxse of the District of Kansas, formed a "rock star trio" with Judge Tennille on an ABA panel earlier this year.