There were ten new cases designated to the Business Court during October 2009. They include two lawsuits against former officers and directors of Wachovia regarding the collapse of Wachovia (Browne and Harris).
Abraham v. Jauregui (Onslow)(Jolly): fraud claims by 77 plaintiffs involving coastal real estate developments.
Blackburn v. L.E. Wooten & Company (Wake)(Jolly):
Judge Albert Diaz of the North Carolina Business Court may be nominated by President Obama to the Fourth Circuit Court of Appeals, according to the Charlotte Observer.
And speaking of Judge Diaz, here’s an interview of him that I hadn’t seen before. The part about the pink hippopotamus is especially interesting.
Digital signatures and medieval law met today in the North Carolina Court of Appeals decision in Powell v. City of Newton, and the twenty-first century emerged the winner.
The Court enforced a settlement agreement involving a conveyance of land, even though no agreement reflecting the transaction had been signed as required by the Statute of Frauds. It relied, in part, on emails between counsel reflecting the settlement and circulating the necessary deed. It held that these satisfied the signature requirement, relying on North Carolina’s Uniform Electronic Transactions Act.
The case arose from the settlement by the parties of their lawsuit in open court, during trial. The transcript reflected Plaintiff’s agreement to convey property to the Defendant as a part of the settlement. A settlement agreement was circulated by email between the lawyers for the parties after that, but Plaintiff refused to sign.
The Electronic Signature Of Plaintiff’s Counsel Satisfied The Statute Of Frauds
Plaintiff based his refusal to follow through on the Statute of Frauds, which requires an agreement to convey land to be in writing, and "signed by the party to be charged." The trial court ordered Plaintiff to sign the settlement papers, and the Court of Appeals majority affirmed. It held that there had been "total compliance" with the Statute of Frauds. It based its decision, in part, on North Carolina’s Uniform Electronic Transactions Act, N.C. Gen. Stat. §66-311 et seq). As far as I know, this is the first mention of that statute by the Court of Appeals.
Judge Jackson, writing for the majority, said:
We note that this was not some barroom conversation between drunken neighbors, agreed to in jest, and written on a random scrap of paper. See Lucy v. Zehmer, 84 S.E.2d 516 (1954). This was an agreement among four parties represented by counsel, in a court of law, supervised by the presiding judge, who inquired of each party whether the terms were agreeable. The party to be charged — plaintiff — confirmed, ‘Yes, that’s my agreement.’
The Court observed that emails had then passed back and forth between counsel regarding the settlement, including drafts of a settlement agreement and a deed. This led to the Court’s first impression reliance on the Uniform Electronic Transactions Act. The Court said:
Pursuant to that Act, plaintiff’s counsel affixed his electronic signature to emails concerning the transaction. . . . When the hearing transcript, draft agreement, draft quitclaim deed, and associated emails are read together, as permitted by the statute of frauds, the settlement agreement that plaintiff was ordered to execute is in total compliance with the statute of frauds.
Other Grounds
The majority also provided other grounds for its decision, including the doctrine of judicial estoppel and a discussion whether the Statute of Frauds should apply at all to court announced settlements.Continue Reading North Carolina Court Of Appeals Rules That Electronic Signature Satisfied The Statute Of Frauds
When lawyers are arguing over whether documents were properly withheld from production on the basis of attorney-client privilege, one side or the other will often say "let’s have the Judge do an in camera review." (Translation for nonlawyers reading this blog: let’s drop all these documents on the Judge and let him or her decide).
Claims involving the "raising of capital" don’t fall within the scope of North Carolina’s unfair and deceptive practices statute. That was the basis for the dismissal of Chapter 75 claims yesterday in two cases, one decided by the North Carolina Court of Appeals and the other by the North Carolina Business Court.
In the Court
Get ready for changes in how to count the days for meeting deadlines under Rule 6 of the Federal Rules of Civil Procedure. The upcoming changes abandon the practice of excluding weekend days and holiday days in calculating a response date when the period for the response is less than eleven days.
On December
Eleven new cases were designated to the Business Court in September 2009, including a class action against the North Carolina Department of Revenue claiming that the taxation of retirement benefits paid to certain state employees is unconstitutional (Pendergraph).
Bankers Life and Casualty Co. v. Barnes (Mecklenburg)(Diaz): claims for misappropriation of confidential information and trade
Litigation between shareholders can be as unpleasant and messy as a divorce. That was the situation today in Koopman v. Koopman Dairies, Inc., a case which the North Carolina Business Court called a "corporate domestic dispute."
That analogy to family law led the Court to award attorneys’ fees for the defendants’ contempt of court
If you are a secured creditor trying to sell off the collateral securing your loan in a "commercially reasonable manner" under North Carolina’s Uniform Commercial Code, it’s not a good idea to advertise the sale right before Christmas and have the sale right after Christmas.
That’s at least part of the lesson from the North Carolina Court of Appeals last week in Commercial Credit Group, Inc. v. Barber, where the Court ruled that the secured creditor’s Christmas-time sale had not been commercially reasonable, and denied its request for a substantial deficiency judgment.
The Facts
Barber had given his lender a security interest in a Peterson Pacific 5400 heavy duty waste recycler, a specialized piece of commercial equipment which grinds logs into wood chips.
The recycler broke down almost immediately after Barber bought it. The dealer wasn’t able to repair it, and Barber defaulted on his loan to Commercial Credit because he couldn’t generate any revenue from the recycler. The creditor took possession of the broken down recycler and gave Barber written notice that it would sell it at public auction on December 27, 2007.
Commercial Credit complied literally with the terms of its security agreement with Barber, which said that a public sale "will be deemed commercially reasonable" if (1) the Debtor had ten days notice of the sale, (2) the sale was advertised twice in at least one newspaper in the area of the sale, and (3) the terms of sale were 25% down plus the balance within 24 hours.
Commercial Credit gave ten days notice. It advertised the sale twice (on December 23rd and 26th) in general publication newspapers. It stated in the ads that 25% down would be required, but with a slight variation that turned out to be a problem, and said that the sale would be "as is," which also turned out to be a problem.
Only one bidder other than Commercial Credit showed up at the December 27th sale. Commercial Credit made the only bid of $100,000. Commercial Credit sold the recycler a few months later at a private sale for $90,000 more than its bid, but still sued to recover the full $128,000 difference between its auction bid and the outstanding balance on the loan.
The trial court ruled that the sale hadn’t been conducted in a commercially reasonable manner and rejected Commercial Credit’s claim for a deficiency judgment. The Court of Appeals affirmed, taking issue with the content of Commercial Credit’s advertising of the sale, and the timing of the advertisements about the sale.
Problems With The Timing Of The Advertisements
The Court of Appeals found fault with the timing of the ads run by Commercial Credit right before and after Christmas. Judge Robert N. Hunter said that a public sale was one where "the public has had a meaningful opportunity for competitive bidding," and that the advertisements by Commercial Credit were insufficient to generate that "meaningful opportunity":
The recycler at issue in this case has a narrow commercial use, and as a result, the pool of bidders potentially interested in this equipment was necessarily limited from the outset. This fact was then inexplicably exacerbated by Creditor’s decision to run advertisements for the auction in two general circulation newspapers just two days before and one day after the Christmas holiday. Obviously, scheduling a public auction for a highly specialized and expensive piece of inoperable machinery just two days after Christmas would almost certainly not enhance “competitive bidding” under N.C.G.S. § 25-9-610. Perhaps the best evidence of the result of Creditor’s decision was that only one other person in addition to Creditor attended the auction.
According to the Court, Commercial Credit "should have chosen a more appropriate date of sale, and tried considerably harder to market the recycler by targeting legitimate prospective buyers." It said "there is no excuse for putting forth clandestine advertisements that are misleading, obtuse, and targeted to no one during the busiest holiday season of the year."Continue Reading Secured Creditor’s Sale Of Collateral The Day After Christmas Wasn’t Commercially Reasonable
Lawyers don’t have any obligation to disclose information harmful to their client’s position during settlement discussions, the North Carolina Court of Appeals ruled today in Hardin v. KCS International, Inc.
The parties in Hardin had settled an earlier lawsuit involving plaintiff’s claims over problems with his new yacht. Plaintiff then was dissatisfied with the repairs