Williams Mullen Corporate Law Alert - North Carolina

by David F. Paulson, Jr. & Miles S. Bruder* Enforcing commercial contracts will likely become a less-costly proposition in North Carolina this fall, thanks to a new exception to the state's general ban on attorneys' fee awards to a prevailing party in litigation. Session Law 2011-341...

North Carolina's Revised Rules Of Civil Procedure Regarding Electronically Stored Information

Revisions to the North Carolina Rules of Civil Procedure became effective to actions filed on or after October 1, 2011. A blacklined version showing the changes wrought by a law titled an "Act to clarify the procedure for discovery of electronically stored information and to make conforming...

E-Discovery Landmark Decision For NC: Attorney-Client Privilege Waived In Electronic Discovery Production

In a classic understatement, Judge Gale said in a North Carolina Business Court opinion last Thursday that " North Carolina case law addressing problems inherent in electronic discovery. . .is not yet well developed ." Op. ¶50. But in Blythe v. Bell , 2012 NCBC 42, the Judge went ahead...

NCCOA: The Constitution Reins in the Uniform Enforcement of Foreign Judgments Act

If you've been practicing law for more than a few years, you've undoubtedly been asked to "domesticate" in North Carolina's courts a judgment entered in another state. A pretty easy task you think, covered by North Carolina's adoption of the Uniform Enforcement of Foreign...

When Law Firms Dissolve: Dividing Up The Proceeds From Contingent Fee Cases

The Court of Appeals in February 2011 ordered Judge Jolly to dissolve Mitchell, Brewer, Richardson, Adams, Burge & Boughman, a law firm organized as a member-managed professional limited liability company. The dissolution was ordered per N.C. Gen. Stat. § 57C-6-02 , which authorizes judicial...

Claims for Legal Malpractice Aren't Assignable in North Carolina

Maybe you've wondered whether a claim for legal malpractice can be assigned. Maybe you haven't. But yesterday, the North Carolina Court of Appeals answered that question. In Revolutionary Concepts, Inc. v. Clements Walker PLLC [ an enhanced version of this opinion is available to lexis.com...

Prior to Derivative Suit, Shareholder Demand Must Clearly Identify Wrong and Demand Action

A shareholder acting on behalf of a corporation may bring a "derivative suit" against corporate directors and management for fraud , mismanagement, self-dealing or dishonesty. Before bringing such a suit, the shareholder must make a written demand that clearly identifies the alleged wrong...

Fourth Circuit on LLC Law and Fried Chicken and Waffles

The Fourth Circuit doesn't get into matters of LLC law very often, but it did last week in Painter's Mill Grille, LLC v. Brown [ an enhanced version of this opinion is available to lexis.com subscribers ]. The LLC and its members were suing their landlord for discriminating against them on...

The "Bright Star" Fades: The NC Business Court on Letters of Credit

I've resolved this year to blog about every numbered decision of the Business Court, as opposed to past years, where my lack of enthusiasm about the more boring decisions has left me writing about less than 100% of the Court's decisions. My resolve was tested with Judge Murphy's decision...

Maybe We Are Getting Closer to a Decision in North Carolina on Whether LegalZoom Is Engaged in the Unauthorized Practice of Law

Legalzoom may be a step closer to overcoming the NC State Bar's assertion that its online legal document service constitutes the unauthorized practice of law (UPL), following yesterday's ruling in LegalZoom, Inc. v. North Carolina State Bar , 2014 NCBC 9 [ an enhanced version of this opinion...

Collateral Estoppel Sinks LLC Members' Claim

It might seem uncontroversial that the members of a limited liability company cannot follow with a personal lawsuit for injuries after their LLC litigates, and loses, claims based on the same issues. But it took the Business Court a while to get to that conclusion last week, in Lancaster v. Harold...

Mark Your Calendar For October 1st For Changes to the Business Court

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...

You Aren't Entitled to "Original" Corporate Records When Making a Shareholder Inspection Request

When is the last time that you needed an "original" document for a trial? Maybe never. The Rules of Evidence permit the admissibility of "duplicates." Rule 1003 of the North Carolina Rules of Evidence says that: A duplicate is admissible to the same extent as an original unless...

Trade Secrets Cases in the NC Business Court: You Show Me Yours Before I'll Show You Mine

There's a new roadblock for plaintiffs in the Business Court suing over trade secrets. It was imposed last week by Judge Bledsoe in DSM Dyneema, LLC v. Thagard , 2014 NCBC 50 , and it bars the plaintiff from proceeding with discovery until the trade secrets allegedly being misused by the defendant...

Business Court (In Judge McGuire's First Opinion) Outlines the "Indispensable Requirements" for The Formation of a Partnership

Well, newest Business Court Judge Gregory McGuire has gotten off to a running start with his first opinion, issued only about a week after his appointment to the Business Court by Governor McCrory. The case is La Familia Cosmovision, Inc. v. The Inspiration Networks , 2014 NCBC 51 [ an enhanced version...

Eighty Five Thousand Reasons Not to Represent an LLC Without the Approval of a Majority of the Members (and one Other Thing)

Be sure that an LLC member has the authority to hire you before accepting the representation of the LLC in a suit by or against another LLC member. That authorization generally requires a majority of the interest of the members, at least under the default provisions of the LLC Act, which apply in the...

The NC Business Court Rules on Recovering Attorneys' Fees in a Derivative Action Against an LLC

In this week's opinion in Ekren v. K&E Real Estate Investments , 2014 NCBC 56 , Judge Bledsoe outlined how a derivative action plaintiff can recover attorneys' fees [ an enhanced version of this opinion is available to lexis.com subscribers ]. What Constitutes A 'Substantial Benefit"...

Don't Try To Get A Retired Business Court Judge's Orders Changed Or Overruled By A Successor Business Court Judge

When there is a change in the Business Court Judge handling your case, there is probably a natural reaction to try to get the new Judge to revisit rulings by the previous Judge which were unfavorable to your client. That effort is most likely to come to naught, as illustrated by Judge Bledsoe's decision...

A "Proper" Party Isn't Necessarily A "Necessary" Party

What is the difference between a "proper" party and a "necessary" party"? Judge McGuire spelled out the difference early this week in Cape Hatteras Electric Membership Corp. v. Stevenson , 2014 NCBC 62 [ an enhanced version of this opinion is available to lexis.com subscribers...