Articles Posted in Contracts

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An attorney-client relationship existed between Defendants and a non-party that contractually agreed to indemnify Defendants, but because Defendants failed to request that the trial court provide written findings of fact and did not present in a timely manner the documents at issue, the trial court did not err in determining that the attorney-client privilege did not extend to the communications at issue. Plaintiff sued Defendants for payment of back rent and other charges due under a lease. Defendants notified the non-party, which agreed to indemnify and defend Defendants in accordance with their agreement. During discovery, counsel for Plaintiff requested copies of documents exchanged between Defendants and the non-party. Defendants moved for a protective order, asserting the attorney-client privilege. The trial court denied Defendants’ motion for a protective order and granted Plaintiff’s motion to compel. The court of appeals affirmed, holding that the attorney-client privilege did not extend to the communications between Defendants and the non-party. The Supreme Court modified and affirmed, holding (1) the non-party’s contractual duty to defend and indemnify Defendants created a tripartite attorney-client relationship; but (2) the trial court did not err in determining that the documents between Defendants and the non-party were not privileged. View "Friday Investments, LLC v. Bally Total Fitness of the Mid-Atlantic, Inc." on Justia Law

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The Supreme Court affirmed the court of appeals reversing the trial court’s order of dismissal that dismissed the attempts of Plaintiff, a former chief of police for the City of Greensboro, to obtain reimbursement from the City for costs he incurred in defending lawsuits brought against him for events that occurred during his tenure as chief of police. The trial judge granted the City’s motion to dismiss, concluding that the City was shielded by the doctrine of governmental immunity and that immunity was not waived. The court of appeals reversed, concluding that Plaintiff set forth allegations that the City waived governmental immunity. The Supreme Court affirmed, holding that Plaintiff’s complaint sufficiently presented allegations that were adequate to raise a waiver of governmental immunity and thus to survive the City’s motion to dismiss. View "Wray v. City of Greensboro" on Justia Law

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In 1999, Plaintiff and Defendants entered into an agreement. Defendants never performed any of their obligations under the agreement. For more than a decade, Defendants allegedly continued to be in breach of the agreement. Despite having never received the benefit of its bargain, Plaintiff waited fourteen years before filing this action in 2014. Plaintiff’s complaint alleged breach of contract, fraud, unfair and deceptive trade practices, and unjust enrichment. The trial court granted Defendants’ motions to dismiss, finding that Defendants did not perform their obligations as early as 2000, and therefore, North Carolina’s statutes of limitations barred all of Plaintiff’s claims. The Supreme Court affirmed, holding that because Plaintiff failed to pursue its claims within the statute of limitations period, Plaintiff’s claims were time barred. View "Christenbury Eye Center, P.A. v. Medflow, Inc." on Justia Law

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CommScope Credit Union (Plaintiff), a state-chartered credit union, hired Butler & Burke, LLP (Defendant), a certified public accounting firm, to conduct annual independent audits of its financial statements. Plaintiff later filed a complaint alleging breach of contract, negligence, breach of fiduciary duty, and professional malpractice. Defendant pleaded seven affirmative defenses, including contributory negligence and in pari delicto. The trial court subsequently granted Defendant’s motion to dismiss and for judgment on the pleadings. The court of appeals reversed, concluding (1) the specific allegations in Plaintiff’s complaint were sufficient to state a claim for breach of fiduciary duty, and (2) Defendant’s affirmative defenses would not entitle Defendant to dismissal at this stage. The Supreme Court affirmed in part and reversed and remanded in part, holding (1) Plaintiff’s allegations did not establish that Defendant owed it a fiduciary duty in fact, and therefore, the trial court correctly dismissed Plaintiff’s breach of fiduciary duty claim; and (2) the members of the Court are equally divided on whether the facts alleged in the complaint established the defenses of contributory negligence and in pari delicto, and therefore, the court of appeals’ decision on this issue is left undisturbed. View "CommScope Credit Union v. Butler & Burke, LLP" on Justia Law

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Beverage Systems of the Carolinas, LLC (Plaintiff) entered into an asset purchase agreement with Loudine Dotoli and two companies to purchase the assets, customer lists, and inventory of the companies. The parties executed a non-competition agreement (Agreement) that contained a provision permitting the trial court to revise its temporal and geographic limits that would otherwise render the Agreement unenforceable. Loudine’s wife, Cheryl, who was not a party to the Agreement, later formed Associated Beverage Repair, LLC. Plaintiff filed a complaint against Loudine, Cheryl, and Associated Beverage, alleging against Loudine breach of the agreement not to compete and against all Defendants tortious interference with contract, tortious interference with prospective economic advantage, and unfair and deceptive practices. Defendants answered that the Agreement was unenforceable by being overly broad in geographic scope. The trial court entered summary judgment for Defendants. The Court of Appeals reversed, concluding that the trial court erred in refusing to amend the Agreement and in granting summary judgment on Plaintiff’s remaining claims. The Supreme Court reversed, holding (1) the Agreement is unenforceable at law and cannot be saved, as parties cannot contract to give a court power that it does not have; and (2) the trial court properly entered summary judgment in Defendants’ favor on Plaintiffs’ remaining claims. View "Beverage Sys. of the Carolinas, LLC v. Associated Beverage Repair, LLC" on Justia Law

Posted in: Contracts, Injury Law

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Plaintiff was assured by Bank that he would qualify for and receive a small business, government-backed loan. After Plaintiff was notified that no government-backed loan was available and aware that he had various potential causes of action against Bank, Plaintiff nonetheless sought and obtained a new commercial loan from the Bank and subsequently expressly waived all offsets and defenses. More than six years after Plaintiff first became aware that no government-backed loan was available, he filed a complaint alleging that he obtained the commercial loan in reliance upon the Bank’s representation that the government-backed loan was forthcoming. Bank raised the statutes of limitation as an affirmative defense and filed a compulsory counterclaim to collect on the amount owed on the commercial loan. The trial court granted summary judgment for Bank. The Court of Appeals reversed. The Supreme Court reversed on the grounds that the undisputed facts showed that Plaintiff chose to obtain a new commercial loan after learning no government-backed loan was available and repeatedly reaffirmed his obligations under the commercial loan and expressly waived any offsets and defenses to the loan and against Bank. Remanded. View "Ussery v. Branch Banking & Trust Co." on Justia Law

Posted in: Banking, Contracts

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In building their home, Plaintiffs purchased SuperFlex, a stucco-like material, to cover the house’s exterior. GrailCoat Worldwide, LLC and GrailCo, Inc. (collectively, GrailCoat), the manufacturers of SuperFlex, provided an express twenty-year warranty for the product. Several years after the construction of their home was completed, the product failed. Plaintiffs brought suit against GrailCoat and Hartley Construction, Inc., the company that had designed and built the home, for damages. Hartley moved for summary judgment under N.C. Gen. Stat. 1-50(a)(5), North Carolina’s six-year statute of repose for claims arising out of improvements to real property. The trial court granted summary judgment for Defendants. The Supreme Court reversed the trial court’s dismissal of Plaintiffs’ claim for breach of express warranty against GrailCoat, holding that GrailCoat knowingly and freely entered into a valid contract of sale with Plaintiffs that provided for a warranty term that exceeded the repose period, and therefore, GrailCoat waived the protections provided by the statute of repose. View "Christie v. Hartley Constr., Inc." on Justia Law

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Plaintiff, an Alabama corporation, filed a breach of contract action against Defendant, a North Carolina limited liability company, in Alabama, alleging breach of contract. The Alabama court entered a default judgment against Defendant. Plaintiff subsequently filed a request to file a foreign judgment in a North Carolina court, presenting a certified copy of the Alabama judgment. In response, Defendant filed a motion for relief from and notice of defense to the foreign judgment. The trial court denied Plaintiff’s motion, concluding that, in accordance with N.C. R. Civ. P. 60(b), the intrinsic fraud of Plaintiff in obtaining the underlying Alabama judgment precluded enforcement of the Alabama judgment as a judgment of North Carolina. The Court of Appeals vacated the trial court’s order, concluding that intrinsic fraud was not a sufficient ground under the Full Faith and Credit Clause to deny Plaintiff’s motion to enforce the Alabama judgment. The Supreme Court affirmed the decision of the Court of Appeals as modified, holding that the Alabama judgment was a final judgment and was entitled to the same credit in North Carolina that it would be accorded in Alabama, and Rule 60(b) had no applicability as a defense to a foreign judgment. View "DocRx, Inc. v. EMI Servs. of N.C., LLC" on Justia Law

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Borrowers applied from a home mortgage loan from Lender. During the transaction, a loan officer made an incorrect statement about lien priority. Borrowers later filed breach of fiduciary and negligent misrepresentation claims against Lender, alleging that the junior status of Lender’s lien decreased the marketability and value of their home and exposed them to increased liability. The trial court granted Lender’s motion for summary judgment on all claims. The Court of Appeals concluded that material issues of fact barred summary judgment on Borrowers’ breach of fiduciary duty claim, reasoning that Lender’s assurance of a first priority lien on Borrowers’ new mortgage loan was an act beyond the scope of a normal debtor-creditor relationship. The Supreme Court reversed, holding that the trial court correctly granted summary judgment for Lender on both claims where no fiduciary duty existed and where Plaintiffs did not forecast evidence that they made a reasonable inquiry into the validity of the loan officer’s statements. View "Dallaire v. Bank of Am., N.A." on Justia Law

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Plaintiff and Defendants formed a limited liability company. The operating agreement contained an arbitration provision providing that any dispute arising out of the operating agreement shall be settled by arbitration. Plaintiff later filed suit against Defendants, alleging numerous claims, including breach of good faith and breach of fiduciary duty. Defendants filed a motion to compel arbitration on those two issues under the operating agreement. The trial court denied the motion, concluding (1) the two claims in question did not arise out of the operating agreement or any breach or violation of the agreement, and (2) alternatively, Defendants waived any right they had to arbitration by engaging in discovery that would not have been available as a matter of right during the arbitration process and that Plaintiffs were prejudiced by these actions. The court of appeals affirmed on the basis of waiver. The Supreme Court reversed, holding that Plaintiff failed to establish prejudicial actions inconsistent with arbitration, and therefore, the court of appeals erred in affirming the trial court's order finding waiver of contractual arbitration rights. Remanded. View "HCW Ret. & Fin. Servs., LLC v. HCW Employee Benefit Servs., LLC" on Justia Law