This week, in an Opinion in Safety Test & Equipment Co. v. American Safety Utility Corp., 2014 NCBC 40, Judge Gale made a significant ruling on which party bears the burden of proof in showing a waiver of the attorney-client privilege (or showing the absence of a waiver)..

The elements that must be shown to make out the privilege are pretty well established.  Communications between lawyer and client are protected by the privilege if:

(1) the relation of attorney and client existed at the time the communication was made, (2) the communication was made in confidence, (3) the communication relates to a matter about which the attorney is being professionally consulted, (4) the communication was made in the course of giving or seeking legal advice for a proper purpose although litigation need not be contemplated[,] and (5) the client has not waived the privilege.  

Op. 11 (quoting Isom v. Bank of America, N.A., 177 N.C. App. 406, 411, 628 S.E.2d 458, 462 (2006))(emphasis added).

Case Of First Impression In North Carolina

But as to that requirement that "the client  has not waived the privilege," does the party asserting the privilege need to prove that there has been no waiver?  That’s the difficult task of proving a negative, and as Judge Gale observed, no North Carolina appellate decision has clearly considered whether "the party claiming privilege has an initial burden to prove the negative of a waiver or whether the privilege proponent need only prove absence of waiver in response to an adequately supported challenge."  Op. 12.

The case before Judge Gale involved a letter from the counsel for Defendant American Safety to one of the individual Defendants (Price) regarding that Defendant’s possible employment with American Safety.  As you might guess, this is a case between competing businesses alleging misappropriation of trade secrets.

Curiously, the Plaintiff already possessed a redacted copy of the otherwise privileged letter, though the parties disputed how Plaintiff had obtained the redacted copy.  Plaintiff said that Price had voluntarily given it the letter, but Price denied that.  The Defendants implied that the letter had been stolen.

The Plaintiff also sought by motion to compel to obtain another letter from the same counsel for American Security written about two weeks later, which was identified on a privilege log.

So who wins this skirmish?  The party claiming the letter is protected by the privilege and denying any waiver, or the opposing party, with disputed evidence of waiver?

The Court Adopts A Burden-Shifting Approach

In resolving this question, the Court adopted a "burden-shifting approach," which it said was "'[t]he prevalent, albeit unstated, practice’ in the federal courts where issues of potential waiver arise."  Op. Par. 13 (quoting 2 Paul R. Rice, Attorney-Client Privilege in the United States, §9:22, at 82 (2013-2014 ed. 2013).

That approach goes like this:

Under this burden-shifting approach, courts impose the initial burden of establishing the basic elements on the privilege proponent. This initial burden does not require the privilege holder to affirmatively negate waiver. Rather, once the proponent of the privilege establishes the basic elements of privilege, the burden of production of evidence shifts to the opponent to establish a prima facie case of waiver.  If the privilege opponent establishes a prima facie case of waiver, the burden of going forward with evidence shifts back to the proponent to rebut the prima facie case by demonstrating that the privilege is still viable.  Ultimately, the privilege proponent bears the burden of persuasion.

Op. 13 (citations omitted).

Given that the parties submitted conflicting evidence on the waiver issue, Judge Gale applied the principle that "[w]here the weight of the evidence is equal, the adverse ruling must be against the party with the ultimate burden of proof."  Thus, the Defendant lost on its claim of privilege, and it was directed to produce an unredacted copy of the letter already in the Plaintiff’s possession.

Subject Matter Waiver Applies When The Waiver Is Not Intentional

The Defendants were also ordered to produce the second letter, the one which was not in the Plaintiff’s possession.  Judge Gale said that he could not conclude that the waiver as to the first letter was inadvertent and that the waiver of privilege in the first letter therefore extended to the second.  Op. 19.

The result would have been different if the waiver had been inadvertent.  The Business Court has previously held that

[T]he general rule that a disclosure waives not only the specific communication but also the subject matter of it in other communications is not appropriate in cases of inadvertent disclosure . . . .

Morris v. Scenera Research, LLC, 2011 NCBC 34 at *33.

Judge Gale stanched the flow of blood there.  He ruled that he would not require the Defendants to produce any other communications from their counsel.

 

 

I don’t know any lawyers who specialize in winding up corporations, but if any of you are out there, you should read this post.

It is important to remember, when winding up a corporation, that "principals and directors of a corporation owe a fiduciary duty to creditors of the corporation when the corporation is insolvent and ‘under circumstances amounting to a "winding up" or dissolution of the corporation.’"  Order 6.

In an Order entered last week in Americana Development, Inc. v. Ebius Trading & Distributing Co., Judge Jolly entered a TRO against a financially troubled corporation preventing it from paying debts that had been guaranteed by its principals and officers to the exclusion of its other debts.

In granting a Temporary Restraining Order, Judge Jolly said that the individuals were:

using their positions as principals and officers of [Ebius and its parent corporation] to secure a personal benefit by satisfying only those debts for which they are personally liable.  If Defendants are permitted to favor only those creditors whose debts are personally guaranteed, Plaintiff, as a non-guaranteed creditor of Defendants, would be at risk of significant injury as its claim would go wholly unsatisfied as a result of the improper distribution by [the individuals].  The injury caused by the improper liquidation of Defendants’ assets would be irreparable.

Op. 7.

The Defendants were enjoined from paying the debts on which Ebius was not liable, and also from paying any of the corporation’s debts other than on a pro rata basis.

Congratulations to my colleague Clint Morse  for obtaining this result for the Plaintiff.

 

I think I might have made a Motion for a More Definite Statement.  If I did that, I did it only once, and I can’t remember the result.  Asking for a more definite statement is a rarely used litigation maneuver, allowed by Rule 12(e) of the North Carolina Rules of Civil Procedure.

The Defendant in the NC Business Court case of Shaw v. Shaw made a Rule 12(e) Motion but it was rejected in an Order yesterday by Judge Bledsoe.  The Judge said:

Motions for a more definite statement are not favored by the courts and are ‘sparingly granted because pleadings may be brief and lacking in factual detail, and because of the extensive discovery devices available to the movant.’  Ross v. Ross, 33 N.C.App. 447, 454, 235 S.E.2d 405, 410 (1977)(citations omitted).  As long as the pleading meets the standards of N.C.R.C.P.  Rule 8 and the opposing party is adequately notified of the nature of the claim, a motion for more definite statement will be denied.  Id.

Order 10 (emphasis added).

If you are curious about the allegations in the Complaint which were alleged to be too indefinite to allow a response, they were paragraphs 25(e) and (j), which concerned the Defendant’s claimed making of unauthorized loans and payment of excessive compensation.

Judge Bledsoe ordered that the allegations fairly notified the Defendant of the claims against him, given the notice pleading requirements of Rule 8.

What about Complaints that go beyond the notice pleading requirements of Rule 8, that have too much detail?  That’s a different kettle of fish. I’ve more often made a Rule 8(e) Motion, arguing that a Complaint violated Rule 8 because it was not "concise and direct."  But that’s mainly because I like the word "prolix."  You don’t get to use it very often.

If you litigate cases in the NC Business Court, mark your calendar for October 1st.  That’s when the General Assembly’s "modernization" of the Business Court is due to become effective.  The bill containing these changes was signed into law by Governor McCrory last week. 

I wrote about the proposed bill back in May, and you can look back at that post as most of the changes proposed in the initial version of the bill have made it through to the approved version.

There were some changes to the bill before it was passed, and here are a few new wrinkles:

Broadened Scope Of Appeals To The NC Supreme Court

In the original bill, the General Assembly authorized a direct appeal to the NC Supreme Court from any final judgment of the Business Court.

The enacted law broadens the scope of Business Court rulings that can be appealed to the Supreme Court, allowing appeals from an interlocutory order from the Business Court that does one of the following:

a.     Affects a substantial right.
b.     In effect determines the action and prevents a judgment from which an appeal   might be taken.
c.      Discontinues the action.
d.     Grants or refuses a new trial.

Revised G.S. §7A-27.

I’m worried about the Supreme Court getting bogged down in deciding whether an interlocutory order really "affects a substantial right."  The language regarding interlocutory appeals is identical to the language governing interlocutory appeals to the NC Court of Appeals. It seems like half of the decisions from the Court of Appeals go on for pages on that issue before deciding that the appeal before it doesn’t "affect a substantial right" and should therefore be remanded to the trial court.  The Supreme Court may face the same quicksand. 

But even so, this change will provoke more business-related decisions from the NC Supreme Court.  That’s certainly a good thing.  I’m at a loss to remember the last one — it might be Meiselman v. Meiselman, 307 S.E.2d 551, 309 N.C. 279 (1983), decided over thirty years ago.

More Written Opinions From The Business Court

Under the enacted law, the Business Court Judges will be required to issue a written opinion granting or denying a motion under North Carolina Rules of Civil Procedure 12, 56, 59, or 60, "or any order finally disposing of a complex business case"  except for orders approving a settlement  or a jury verdict.  New G.S. §7A-45.3.

That’s a significant expansion of the Court’s opinion writing obligation.  Currently, its only obligation to issue a written opinion is "upon final disposition of the case" per Rule 2.1(b) of the North Carolina General Rules of Practice.

And the Court currently issues many one or two paragraph orders denying motions to dismiss (per Rule 12) or for summary judgment (per Rule 56).  Will those brief rulings constitute "written opinions" denying those motions, or will the Court need to engage in detailed discussion about why it is denying a motion?

Stay of Cases That Should Be, But Aren’t Designated To The Business Court

The new law requires in G.S. §75A-4(b) that certain types of cases must be designated to the Business Court.  Briefly, these are contested tax cases on appeal from the Office of Administrative Hearings, many cases falling within the Court’s jurisdiction in which the amount in controversy is at least $5 million, and cases involving regulation of pole attachments pursuant to G.S. §62-350.

On that $5 million threshold, the party drafting the pleading is obligated under an amendment to Rule 8 of the North Carolina Rules of Civil Procedure contained in the passed bill to state whether relief is demanded in that amount.

If the party filing a case which the statute requires be designated to the Business Court doesn’t do so, the Superior Court in the county where the case was filed must stay the case until the party who was required to designate it has done so.  The original  version of the bill allowed a dismissal without prejudice as an alternative.  New G.S. §7A-45.4(g).

Designation Fee Now Recoverable As A Cost

It’s expensive to designate a case to the Business Court.  The Legislature raised the fee to $1,000 in September 2009, and the new law raises the fee by $100, to $1100.  New G.S. §7A-305(a)(2)

But the good news now for parties who designate a case, and then prevail, is that the designation fee will now be a recoverable element of costs.  That’s in new G.S. §7A-305(d)(12).  This change was lacking in the original version of the bill.

 

If you’ve been reading this blog for a while, you know that once a case is in the Business Court, it is in there forever, even if the issues that justified it being there in the first place are subsequently resolved. 

But when does the Court’s jurisdiction begin?  You might think it is when the Chief Justice of the Supreme Court signs an Order designating the case to the Court, especially if you look at G.S §75A-45.4(f), which says that:

Once a designation is filed under subsection (d) of this section, and after
preliminary approval by the Chief Justice, a case shall be designated and administered a complex business case. All proceedings in the action shall be before the Business Court Judge to whom it has been assigned.  . .

The decision by Judge Bledsoe last week in 130 of Chatham, LLC v. Rutherford Electric Membership Corp., 2014 NCBC 35, got me thinking about this issue, though on the surface the case has nothing at all to do with when the jurisdiction of the Business Court attaches.

The issue in the case was whether Judge Bledsoe should stay an order entered in the case while the decision was being appealed. 

The stay requested by Defendant REMC was of an Order entered in Rutherford County Superior Court.  It required REMC to provide the Plaintiff with the list of its members, the minutes of its Board of Directors, records of its member actions, and its financial statements.

The chronology of events is important here.  The case was designated to the Business Court by the Chief Justice on July 15th.  The Order being appealed from was entered in Rutherford County after that, on July 28th, following a hearing on July 21st.  Business Court Chief Judge Jolly assigned the case to Judge Bledsoe after the hearing, but before the Rutherford County Judge’s ruling, on July 23rd. 

Judge Bledsoe refused to enter a stay, ruling that entering a stay would "effectively put the Court in the position of overruling [the Rutherford County Judge’s] Order in violation of North Carolina law."  Op. ¶24.

What the Opinion doesn’t mention is why a Superior Court Judge had entered an Order after the case had been designated to the Business Court.  Business Court Rule 15.1, titled "All Motions to be Filed in Business Court," says that "[a]fter a case has been assigned or designated to the Business Court . . . parties shall seek rulings on all motions in the case from this Court, and not from Superior Court Judges or Clerks in the counties where cases originate." (emphasis added).

So why had a Rutherford County Superior Court Judge entered a ruling in a case that had been designated to the Business Court?  I found the answer to this riddle in some of the filings by the Plaintiff, which included emails to and from the Business Court about what was then the pending motion to obtain the documents.   It turned out that the determining factor was that although the case had been designated to the Business Court, it had not yet been assigned to a particular judge.

Given that the motion had some urgency to it, the Plaintiff went ahead to have it heard in Rutherford County notwithstanding the designation to the Business Court.  But it kept the Business Court informed of its intentions and got a go-ahead to proceed.

Judge Jolly’s law clerk stated in an email that "[b]ecause the Business Court is not a court of jurisdiction, a hearing may go forward on the pending motions in the county court of origin if the hearing is needed before the case is able to be assigned to a Business Court judge."

Judge Bledsoe’s law clerk then stated in an email "[b]ecause the pending matters before [the Rutherford County Superior Court Judge] . . . were heard and calendared for further hearing prior to the designation of the case to the Business Court, it is the policy of the Business Court that [the Rutherford County Superior Court Judge] can decide whether to go forward with the hearing and rule on the matters pending before him at the time of designation."

Then, Judge Jolly’s Trial Court Coordinator weighed in.  She handles the assignment of designated cases to Business Court Judges. but she said that she had been out on vacation and that the case had not yet been assigned due to her absence.  She added "[p]lease keep in mind that Business Court designation is not jurisdictional.  Your hearing may still go forward in Rutherford County."

You can read those e-mails here.

So, that’s the long answer to why a Superior Court Judge was entitled to proceed to make a ruling in a case which had already been designated to the Business Court.  But don’t read this post and think that you can get away with proceeding in the Court for the county where the case originated after it has been designated to the Business Court.  Ordinarily, a Judge is assigned immediately, removing the gray area into which this case fell. 

And I wouldn’t take emails from Court personnel as the gospel.  Judge Bledsoe didn’t discuss at all the propriety of the Superior Court’s ruling in what had become a Business Court case.

Given 130 Chatham, you  can kinda sorta still obtain an Order from the Superior Court from which you designated the case even after it has been designated to the Business Court by the Chief Justice.  At least until your case is assigned to a Business Court Judge.

I don’t recommend trying to pull off this trick.

 

 

The Business Court is electronic.  Paper copies of documents are not filed with the Business Court.  So when you e-file a Notice of Appeal, is that sufficient for purposes of Rule 3 of the NC Rules of Appellate Procedure?

Let’s look at the Rule first.  It says that:

Any party entitled by law to appeal from a judgment or order of a superior or district court rendered in a civil action or special proceeding may take appeal by filing notice of appeal with the clerk of superior court and serving copies thereof upon all other parties within the time prescribed by subsection (c) of this rule.

N.C. R. App. Pro. 3(a)(emphasis added).

The Plaintiff in Ehrenhaus v. Baker, 2014 NCBC 30 wanted to file a cross appeal from Judge Murphy’s decision awarding attorneys’ fees to his lawyers in his lawsuit over Wachovia’s merger with Wells Fargo.  If you need to be refreshed on that ruling, I wrote about it in April.

Since one of the individuals objecting to the fee award had already filed a notice of appeal, the Plaintiff had ten days after that to file his own notice of appeal.  N.C. R. App. Pro. 3(c).

The tenth day was May 2, 2014.  Plaintiff e-filed his notice of appeal with the Business Court on April 30, 2014. 

Was the notice of appeal timely?  No, said Judge Gale, as the notice of appeal was not filed with the Mecklenburg County Clerk of Superior Court until May 15, 2014.

The decision hinged on whether the e-filing, which had been delivered to the "Clerk of Court" at the Business Court, satisfied the filing requirement of Appellate Rule 3 of being directed to the "clerk of superior court."  (Note that the Business Court’s electronic filing system produces a Notice of Electronic Filing which includes a reference to service on "Clerk of Court,"  which actually is the email address of the Court’s law clerk in Raleigh.)

Plaintiff argued that the Business Court was a separate Superior Court within the North Carolina General Court of Justice and that he had therefore properly filed his notice of appeal with the Business Court "Clerk of Court."  Judge Gale rejected this argument, and observed that "the Business Court does not have its own clerk of court."  Op. 11 (emphasis added).

While the Court was "sympathetic" to Plaintiff’s argument that he had been misled by the electronic filing system into believing that he had properly filed his notice of appeal, Judge Gale ruled that he could not "overlook the plain language of Appellate Rule 3 that requires a notice of appeal to be filed with the clerk of superior court within the time prescribed by Appellate Rule 3(c)."  Op. 13.

So Judge Gale dismissed Plaintiff’s appeal.  But why did the Business Court have the authority to dismiss the appeal?  The answer is that Appellate Rule 25 "allows the trial court to dismiss an appeal if the appellant failed to give notice of appeal within the time allowed by"  Appellate Rule 3.  Landingham Plumbing & Heating of North Carolina, Inc. v. Funnell, 102 N.C. App. 814, 815, 403 S.E.2d 604, 605-06 (1991).

I don’t know why Judge Gale didn’t reference Business Court Rule 8.1 in his Opinion.  That Rule makes it clear that all filings with the Business Court must be made  with the Clerk of Superior Court in the judicial district where the case is pending.  It says that "all documents and materials submitted to the Business Court shll also be filed wihin five (5) business days with the Clerk of Superior Court in the judicial district in which the matter is pending."

Is an appeal of this ruling about an appeal a possibility?  Maybe, as the Plaintiff may have a legitimate argument that he was misled by the Business Court’s filing system.  Judge Gale observed that the Court has corrected the "default" in the system that recognized the Court’s "Clerk of Court."  He said that:

Prior to the briefing on the Motion, the court was not cognizant that the Notice of Electronic Filing email in this and other actions refers to the notice as having been sent to “Clerk of Court” by email to raleigh.clerk@aoc.nccourts.org.  That email address is for the law clerk resident in the Raleigh chambers of the Honorable John R. Jolly, Jr., Senior Special Superior Court Judge for Complex Business Cases. The court believes this application was added as a default by the system administrator. This default has now been removed.

Op. 12.

So if you are filing an appeal from a Business Court ruling, make sure to file a paper copy in the office of the Clerk in the County in which the case was filed within the time period set in Appellate Rule 3.

 

 

 

 

 

When I was a young pup preparing to go to court against the uncommon adversary who was proceeding without a lawyer, I would joke that "I hope I don’t lose."  Luckily, I never did.

But the Plaintiff in Seraph Garrison, LLC v. Garrison, 2014 NCBC 28, didn’t have the same good luck.  It lost a case, following trial by Judge Murphy, to a Defendant who had no lawyer and didn’t even bother to appear for trial.

Defendant Garrison was the CEO and a member of the Board of Directors of Garrison Enterprises, Inc.  He was sued derivatively for breaching his fiduciary duty to the corporation.  The alleged breaches included:

  • failing to pay payroll taxes due from the corporation.
  • failing to make 401(k) contributions.
  • executing a significant contract with an outside vendor without obtaining Board approval.

All of these things were uncontested at trial, but the defalcating Defendant escaped without any liability without even appearing at trial.  How so?

Judge Murphy said that:

Plaintiff has failed to present evidence that Defendant’s decision not to pay payroll taxes and 401(k) contributions was not in good faith, beneath the standard of care an ordinarily prudent person in a like position would exercise under similar circumstances, or not in a manner Defendant reasonably believed to be in the best interests [of[ the corporation.

Op. ¶38.

The evidence was that the corporation was in a cash crunch, and the Defendant had chosen to pay employees rather than the IRS obligations in order to keep the business running.

And as to the unapproved contract,  the Judge said that there was"insufficient evidence before the Court to support a finding that Defendant was obligated to seek approval before entering into contracts on behalf of" the corporation.  Op. ¶41.

But the Court found that the Defendant had breached his fiduciary duty by misleading the Board on the contents of the contract.  He had presented the Board with a previous unexecuted draft of the contract which was more favorable than the one he ended up actually signing.  No damages were awarded for this breach, because the Court ruled that the Board had not relied on the misrepresentation.

In any event, this unrepresented Defendant escaped scot-free.  There was no showing of the Board relying on his misrepresentation to its detriment.

Just a caution:  If you are thinking that you can proceed without a lawyer in the Business Court because of this case, you are wrong.  Don’t do it.  But to be fair to this Plaintiff, who lost against a pro se rival, it was more than good luck for the Defendant.  He was represented by counsel until his lawyer withdrew, shortly before trial.

 

The lawsuit filed by the Atlantic Coast Conference against the University of Maryland continues to percolate in the North Carolina Business Court.  But the University will have to proceed without its chosen attorneys, as the Court last week refused to admit them on a pro hac vice basis.  The decision came in an Order in Atlantic Coast Conference v. University of Maryland.

If you have forgotten about the ACC’s lawsuit against the University of Maryland, it was filed by the ACC to recover the $50 million exit fee it says is due from the University upon its departure from the ACC to join the Big Ten Conference.  The University disputes the validity of the exit fee, and has counterclaimed in very detailed claims for violation of antitrust laws and unfair competition.

The Maryland University was represented by a lawyer from the Maryland Attorney General’s office, and two lawyers from the Milwaukee firm Foley & Lardner.  When these lawyers moved to be admitted pro hac, the ACC objected.  It argued that the counsel from Foley & Lardner were in violation of Rule 1.7 of the North Carolina Rules of Professional Conduct due to their representation in other matters of Florida State, Virginia Tech, and the University of Virginia, members of the ACC, and the University of Louisville, which officially joined the ACC on July 1st.

Rule 1.7 says that "[a] lawyer shall not represent a client if the representation involves a concurrent conflict of interest."   There is a concurrent conflict of interest if:

(1) the representation of one client will be directly adverse to another client; or

(2) the representation of one or more clients may be materially limited by the lawyer’s responsibilities to another client, a former client, or a third person, or by a personal interest of the lawyer. 

The ACC lawyers argued that the University of Maryland’s lawyers were acting adversely to the interests of their other University clients.  One of the comments to Rule 1.7 is favorable to the University’s position.  Comment 34 says that "[a] lawyer who represents a corporation or other organization does not, by virtue of that representation, necessarily represent any constituent or affiliated organization."

But Comment 34 ends on a bad note for the University’s argument.  It says that this qualification does not apply if "the lawyer’s obligations to either the organizational client or the new client are likely to limit materially the lawyer’s representation of the other client."

The University’s (former) counsel argued that they could ameliorate any conflict by hiring independent counsel to take the depositions of any institution which was a member of the ACC and represented by them.  There is an ABA Opinion that supports this position, ABA Standing Committee on Ethics and Professional Responsibility, Formal Opinion 92-367, but it also says that if the "conflict is clearly forseeable, then the solution, absent client consent, is clear enough: the prospective engagement must be declined."

The Court refused to admit the University’s attorneys on a pro hac basis, noting the lack of any conflict waiver, and stating that:

[w]hile it is true that a party’s right to choose its own counsel is generally considered fundamental, ‘an out-of-state attorney has no absolute right to practice law in another forum.’

Order ¶6.

Judge Jolly did admit pro hac an attorney from the Maryland Attorney General’s office to represent the University, observing "the public policy behind permitting the attorney general of another state to practice in North Carolina, combined with the absence of direct legal authority preventing" his appearance in the case.  Order ¶11.

Is the resolution of this pro hac admission issue a victory for the ACC?  My general philosophy on efforts to preclude opposing counsel from representing a client is that you face a risk that they will be replaced by better lawyers.  In the University’s situation, that seems to be unlikely.  Their now unadmitted counsel looked like a powerhouse in the area of sports law.  So score this as a win for the ACC.  But it’s early in the first quarter.

 

Charlotte attorney Louis A. Bledsoe, III has been appointed by Governor Pat McCrory as a Special Superior Court Judge, and NC Supreme Court Justice Sarah Parker has designated him as a Special Superior Court for Complex Business Cases, which means he will be handling cases in the Business Court.

The Governor’s press release said this about Judge Bledsoe:

Louis Bledsoe’s extensive experience in business and commercial litigation makes him well-suited for the Business Court. He has developed a great reputation as a litigator and has earned the trust and respect of many members of the Bar. He will be an outstanding judge for our state’s Business Court.

I don’t often find myself in agreement with what Governor McCrory says, but he is absolutely right about Judge Bledsoe.  He will be an excellent Business Court Judge.  Until crossing to the other side of the bench, Judge Bledsoe was a partner at Robinson, Bradshaw & Hinson, which is undoubtedly one of the best law firms in the State of North Carolina.

New Judge Bledsoe will sit in the Charlotte Business Court.  He begins his judicial career with a pretty full docket of cases.  It looks like all of the cases previously being handled by Judge Murphy, who was until yesterday the only Business Court Judge in Charlotte, already have been assigned to Judge Bledsoe.  Judge Murphy’s term on the Court ended June 30th.

I’m not sure how much longer it will be available, but here is a link to Judge Bledsoe’s bio at Robinson Bradshaw.

Congratulations to Judge Bledsoe on a well-deserved appointment.  He has been a reader of this blog and I hope he will continue.

There’s an ominous sounding sentence in a Business Court decision this week:

A party practicing before the North Carolina Business Court should take the deadlines imposed by its orders and the rules of practice very seriously.

Estate of Capps v. Blondeau. 2014 NCBC 24 at 36.  It is so ominous sounding that you would expect that sentence to be followed by punishment of the non-compliant party.  But Judge Jolly exercised mercy over the party which hadn’t followed the rules.

What was the rule violation?  Two of the Defendants in the case (the Knights) hadn’t filed their brief in support of their motion for summary judgment until more than 24 hours after the filing deadline set by the Court in its Case Management Order (requires all motions to be accompanied by a brief).  Also, the Knights never filed with the Court the exhibits referenced in their brief (BCR 15.5 requires a party to provide documents supporting allegations of fact in a brief).  Adding to their disregard of the Business Court Rules, the Knights never filed their Motion with the Wake County Superior Court (required by BCR 8.1)and they did not pay the required twenty dollar motion fee (dictated by N.C. Gen. Stat. § 7A-305(f)).

Plaintiffs demanded that the Business Court summarily deny the Knights’ Motion for Summary Judgment due to the rules violations, which is permitted under BCR 15.11.  That rule says that:

[t]he failure to file a brief or response within the time specified in [BCR 15] shall constitute a waiver of the right thereafter to file such a brief or response.  . . .   A motion unaccompanied by a required brief may, in the discretion of the Court, be summarily denied.

Judge Jolly, in his discretion, opted to consider the Knights’ Motion for Summary Judgment notwithstanding the Rules violations.  He referenced an appellate court decision — Hammonds v. Lumbee River Elec. Membership Corp., 178 N.C. App. 1, 15 (2006) — as support for his holding that:

[i]n deciding whether to dismiss a filing for procedural error, courts should weigh the impact of the rule violations on the non- violating party and the importance of upholding the integrity of the rules against the broader public policy favoring the resolution of disputes on the merits.

Op. Par. 37.  He noted the "relatively short delay" in meeting the deadline and the "relatively minor impact on Plaintiffs due to the delay."  Op. 37.

But after all that procedural hoopla, Judge Jolly went ahead, considered the motion for summary judgment and denied it without much discussion. 

So the only valuable lesson out of this decision is to follow the Business Court Rules.  A complete set of thos Rules is available here.