225 Hillsborough Street, Suite 300 Post Office Box Raleigh, North Carolina Telephone (919) Fax (919)

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1 225 Hillsborough Street, Suite 300 Post Office Box Raleigh, North Carolina Telephone (919) Fax (919) S. McDowell Street, Suite 1100 Post Office Box Charlotte, North Carolina Telephone (704) Fax (704) The Orbita Center 1205 Culbreth Drive, Suite 200 Wilmington, North Carolina Telephone (910) Fax (910) CRANFILL, SUMNER & HARTZOG, L.L.P. April 2004 Litigation forum General Liability Litigation Intervention By Carrier When Insured Cannot Be Located F. Marshall Wall A courtesy copy of a new suit has landed on your desk. You notice that your insured has been served by publication and that your company s letters to him have been returned as undeliverable. Counsel is also not able to find him. The answer is due tomorrow. What can you do? One possibility is to file a motion to intervene. In the case of Dunkley v. Shoemate, 350 N.C. 573, 515 S.E.2d 442 (1999), North Carolina s Supreme Court held that an attorney hired by an insurance carrier to represent one of the defendants in that case could not appear for him without his authority. The allegations in Dunkley involved a resident at UNC Hospitals who allegedly assaulted a patient, then disappeared when it became clear that he had lied to UNC about his qualifications for the position. UNC and its insurance trust hired a law firm to represent the missing resident and to protect its interests. The firm was never able to contact the resident, but made a motion to appear on his behalf in a limited capacity. This motion was granted, but later the plaintiff s LITIGATION FORUM is an informational newsletter provided regularly by the law firm of CRANFILL, SUMNER AND HARTZOG, L.L.P. It is designed to provide helpful and current information in all areas of our practice, which include general liability litigation, workers compensation, medical & professional malpractice, employment law, business/commercial litigation, insurance coverage law, construction law, products liability, appellate litigation, education law, and a variety of other areas related to civil litigation. Obviously, only a limited amount of information can be given within the confines of a short newsletter, so if further information is needed, or if there are any questions, please contact any of our attorneys in Raleigh, Charlotte or Wilmington. visit our website at attorney asked the trial court to remove the law firm from the case on the grounds that it did not have the resident s permission to act as his attorney. After a series of appeals, our Supreme Court agreed with the plaintiff and held that the law firm did not have authority to take any action on the resident s behalf. The firm was not allowed to continue representing the resident. The Court in Dunkley stated that: No person has the right to appear as another s attorney without the authority to do so, granted by the party for which he is appearing. The effect of this decision for insurers has been profound and widespread. When so many lawsuits are filed near the running of a three or four year statute of limitations, locating insureds in the 30 days before an answer is due can prove difficult. This is especially true when plaintiffs serve a defendant by publication, through the Commissioner of Motor Vehicles or in other ways which do not involve actual, personal service. Dunkley suggested a way out for insurers, but it is often not an ideal one. That alternative is for the carrier to hire counsel and have that attorney file a motion to intervene in the lawsuit on behalf of the insurance company. A motion to intervene should be served with the pleading that the intervening party wants to file, in this case the answer. Rule 24(a) of North Carolina s Rules of Civil Procedure allows someone to intervene in a pending lawsuit: in this issue: Employment Law...1 Medical Malpractice...2 Workers Compensation...2 Insurance Coverage Law...4 Products Liability Update...5 Education Law...5 Employment Law...6 General Liability Litigation...7 Civic / Professional Notes...9 Recent Case Results...10 CSH Client Seminars Once again, CSH will present client seminars in the Fall. Our Charlotte seminar will be held at the Adams Mark Hotel on November 4, Our Raleigh seminar will be held at the Woman s Club of Raleigh on December 2, You may register on-line by visiting our website at then clicking onto News and Events, and just following the instructions from there. Please mark these dates and times on your calendar and plan to join us!

2 Employment Law Part 1: An Employer s Obligations under the Fair Credit Reporting Act in the Hiring and Promotion of Applicants and Employees In this day and time nearly every employer finds it necessary to conduct background investigations of potential employees to aid them in the hiring and selection process. Furthermore, an employer may want to conduct a background investigation when considering a current employee for retention or promotion. Such investigations generally involve obtaining criminal records checks, credit checks, and other background reports as well as checking personal references. Employers may be surprised to discover that when conducting these types of background investigations, they are subject to the provisions of the Fair Credit Reporting Act ( FCRA ). Willful noncompliance with the FCRA can subject the employer to compensatory and punitive damage awards, costs and attorney s fees. Part One of this Article outlines the requirements that the FCRA imposes on employers in the context of hiring, retaining or promoting employees. Part Two of this Article, which will be published in the next issue of Litigation, will (1) explore the historical application of the FCRA to sexual harassment and other workplace investigations conducted by outside third-party investigators; and (2) discuss new FCRA amendments which substantially change the application of the FCRA to these types of investigations. When an employer uses outside agencies or individuals to obtain information about a prospective or existing employee, the FCRA applies. Information obtained from an outside agency or source generally falls under the FCRA s definition of either a consumer report or an investigative consumer report. Under the FCRA, a consumer report is defined as a report that bears on an individual s credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics or mode of living. Examples of a consumer report include credit reports, criminal record reports, driving records, educational history, professional licensing verification and social security verifications. An investigative consumer report is defined as a consumer report that bears on an individual s character, general reputation, or personal characteristics and is obtained through personal interviews. Examples of an investigative consumer report include employment background checks, information obtained from personal references and information gathered from interviews with the consumer s friends or acquaintances. It is important to remember that employers are only subject to the disclosure requirements of the FCRA if the information is gathered by or obtained from an outside consumer reporting agency. A consumer reporting agency is one that is in the business of assembling or evaluating consumer credit informa- tion or other information on consumers for the purpose of furnishing it to third parties. Included in this definition of a consumer reporting agency are internet record check services which assemble information on consumers such as Equifax, Accurint, NCrecords.com, 123nc.com, or 4ncrecords.com. Therefore, if an employer goes to an internet record check site in order to obtain information regarding an applicant or an employee, they become subject to the provisions of the FCRA. The FCRA requires that the employer (1) disclose to the employee or applicant that a report may be obtained; and (2) secure that person s written consent prior to obtaining the consumer report. The use of investigative consumer reports triggers additional disclosure rules requiring the employer to give written notice to the applicant that it may obtain such a report no later than three days after requesting the report. The notice must advise the applicant of his/her rights under the FCRA and his/her right to request additional information regarding the nature and the scope of the investigation that may be conducted. If an applicant or employee requests, in writing, within a reasonable period of time, information regarding the nature and scope of the investigation that may be performed, the employer must respond. The employer s disclosure must be in writing and delivered within five days after the request for such disclosure is received. Further, the FCRA requires a pre-adverse action notification prior to any adverse employment decision which is made based in whole or in part on information contained in a consumer or investigative consumer report. The applicant or employee must be advised that this report was the basis for such adverse action and the applicant or employee must be supplied with a copy of the report and a statement of his or her rights under the FCRA. An adverse action notification must be supplied to the applicant or employee within a reasonable period of time after an adverse employment decision is made, stating that the individual will not be given any further consideration as a result of information contained in the report. The name, address and phone number of the consumer reporting agency that performed the search and prepared the report must also be included in this notification. Surprisingly, even when an employer receives a report of workplace violence, sexual harassment or other workplace discrimination and decides to hire someone from outside the company to investigate such allegations, the Federal Trade Commission has taken the position that the FCRA requires an employer to make certain disclosures to the alleged harasser both prior to and after the investigation. Such disclosures have had a somewhat chilling affect on an employer s ability to investigate wrongdoing in the workplace. However, with the advent of the new amendments to the Fair Credit Reporting Act, effective March 31, 2004, employers are no longer subject to all of the FCRA reporting requirements when conducting workplace investigations. It is hoped that these amendments will ease the burden on employers and aid in maintaining the integrity of these outside investigations. The changes mandated by the new FCRA amendments will be explored in Part Two of this Article in the next issue of Litigation. 2

3 Construction Law Several recent decisions of the North Carolina appellate courts have affected positions typically taken by defendants in construction litigation and have clarified the law surrounding indemnity and contribution between general contractors and subcontractors. The decision with the most immediate impact was Kaleel Builders, Inc. v. Ashby. In Kaleel, a general contractor had settled claims relating to alleged construction defects with the owner, and then sought recovery of the settlement from various of its subcontractors. The general contractor sought indemnity and contribution from its subcontractors. The Court of Appeals upheld the dismissal of the indemnity and contribution claims, holding that since the parties had a contractual relationship, there could be no negligence claims between them and thus no right of contribution existed. With respect to the indemnity claims, the Court held that unless the parties contract had an express indemnity provision, under most circumstances there would be no right to indemnification. The impact of this case has been to call into question many 3rd party claims for indemnity and contribution, and to limit the claims against subcontractors to breach of contract and breach of warranty. This decision will particularly impact those cases where a subsequent property owner sues the general contractor in negligence more than 3 years after the building has been completed, which will make the assertions of breach of contract and breach of warranty claims typically barred by the statute of limitations. The Court of Appeals also recently affirmed that the 6 year statute of repose for improvements to real property cannot be tolled. In Moore v. Biddy Construction, the Court held that typical construction defects do not create a situation allowing the statute of repose to be tolled for willful and wanton conduct. The Court held that violations of the Building Code, in and of themselves, are evidence only of negligence and do not allow a plaintiff to get around the strict requirements of the statute of repose. Finally, the Supreme Court somewhat surprisingly reversed a decision of the Court of Appeals on whether implied warranty obligations could be waived. In Brevorka v. Wolfe Construction, the Court of Appeals held that an arbitration agreement in a new home warranty required all claims relating to the construction of the home to be arbitrated, and that disclaimer language in the warranty eliminated any implied warranties of habitability for the home. The Supreme Court reversed this decision and adopted the dissent from the Court of Appeals, which held that the implied warranty of habitability arises as a matter of law and cannot be waived absent clear and express language. The import of this decision shows that North Carolina appellate courts will go to great lengths to protect the rights of consumers, even though the trend of the Court has become increasingly conservative in the past several years. Thus, contractors and insurers who want to ensure that all claims arising out of a contract are subject to arbitration should carefully review their existing contractual language to make sure it can survive close judicial scrutiny. Appellate Litigation Effective January 30, 2004, North Carolina Court of Appeals Chief Judge Sidney S. Eagles, Jr. retired after twenty-two years of service at the Court of Appeals. Judge Eagles served as that Court s Chief Judge for five of those years, a role he characterized as the greatest honor I have ever had or would ever hope to have. On January 21, 2004, the Honorable I. Beverly Lake, Jr., Chief Justice of the North Carolina Supreme Court, announced that Judge John C. Martin would become the new Chief Judge of the North Carolina Court of Appeals. Following Judge Eagles retirement, Judge Martin became the Court s longest serving member. Judge Martin first joined the judiciary in 1977 as a North Carolina Superior Court judge, where he served until Judge Martin was elected to the Court of Appeals in 1985 where he remained for three years. After returning to private practice for several years, Judge Martin was re-elected to the Court of Appeals in 1993 where he continues to serve. In announcing Judge Martin s appointment as the new Chief Judge, Justice Lake emphasized that Judge Martin has the respect and confidence of the members of the Bar, the members of the trial division of the judiciary, as well as his fellow judges on the Court of Appeals and on the Supreme Court. He is imminently qualified to serve in this position, and I am confident that he will provide the necessary leadership and attention to the important responsibilities of Chief Judge of the Court of Appeals. On February 5, 2004, Governor Easley appointed Asheville lawyer Alan Z. Thornburg to the seat vacated by former Chief Judge Eagles. 3

4 Education Law School districts face major challenges trying to meet the needs of disabled students amid the growing procedural requirements of federal special eduction law. Under the Individuals with Disabilities Education Act ( IDEA ) schools must provide every student with a free appropriate public education. This requires regular meetings to develop, review and revise the student's individualized education program ( IEP ) while giving parents notice, an opportunity to participate, progress reports, and due process procedures in the event of a complaint. Once an IEP is developed, students are entitled to receive their special education services in an appropriate placement, in the least restrictive environment ( LRE ). The United States federal court for the middle district of North Carolina recently addressed a number of these IDEA issues in long-running special education dispute over whether a severely disabled student should be placed in a private program in Maryland. In this case, Donna Rascoe, of our Raleigh office, won summary judgment in favor of the school district which had proposed a less restrictive placement in North Carolina. The case involves a now 13 year old boy with Fragile X Syndrome, autism and other disabilities. In 2000, school officials and mental health officials agreed to jointly fund the student s placement at Benedictine School, a private residential program in Maryland. In 2001, school officials proposed a change of placement for the student to a new program in North Carolina which serves students with similar disabilities (PATH). The parents filed a petition for a contested case hearing in the Office of Administrative Hearings. After a lengthy evidentiary hearing, the administrative law judge (ALJ) concluded that the school district had committed procedural and substantive errors in proposing the change of placement. The ALJ was reversed by a state review officer who ruled in favor of the school district. The parents then sought review in federal court. Federal district court Judge William Osteen granted the school district s motion for summary judgment. Judge Osteen found no procedural violations as the school district convened the required meetings to discuss the change of placement and the appropriate persons were present at those meetings. Plaintiffs had argued that the meetings were flawed in part, because neither mental health officials nor officials from PATH attended. Judge Osteen found that all the statutorilyrequired persons were part of the IEP team and that school officials had gathered necessary information from others not in attendance. Plaintiffs also argued that the placement decision was actually made by persons outside the IEP process, namely mental health officials. Plaintiffs pointed to a number letters from mental health officials supportive of the PATH placement and noting the availability of mental health services at PATH. In rejecting this argument, the Court stated that the school district is the agency responsible for providing appropriate special education services. Consistent with the IDEA, this school district held three IEP meetings during which the IEP team made the decision to change the student s placement. Having determined that the school district s decision was procedurally sound, the Court turned to the issue of whether the placement itself was appropriate. Under the IDEA, the placement must be based upon the IEP; must be as close as possible to the child s home; and, consideration must be given to potential harmful effects from the placement. It was undisputed that PATH was closer to the student s home than Benedictine, but the plaintiffs argued that this was irrelevant since the six hour drive was not a problem for them. The Court quickly rejected this argument, noting that the law requires consideration of proximity to home. The Court went on to review substantial evidence from the defendant that the student s IEP could be implemented at PATH. This included testimony from school officials, PATH staff, and an expert in the area of autism. The Court pointed out that the plaintiffs expert witness testified on a number of issues, but was not able to testify on the appropriateness of PATH for this student because she had not reviewed the student s IEP. The plaintiffs also had presented letters from a number of doctors who lauded the student s progress at Benedictine and expressed concern over his ability to handle a transition to PATH. However, none of these letters referenced or discussed the IEP. Further, the school s special education teacher testified that the IEP team did consider the doctors letters as well as other information regarding the student s prior successful transitions. The Court concluded that the student would overcome any problems with transition to PATH and that the evidence as a whole, demonstrated that the IEP could be successfully implemented at PATH. This case reinforces the importance of the IEP meeting process in providing services to disabled students. School districts must always adhere strictly to requirements for convening meetings and considering all available information before making decisions. They also must stay focused on the IEP itself and what it requires in the way of appropriate services for a student. One additional procedural requirement of the IDEA which was not at issue in this case has had significant impact on the case. The IDEA requires that, during the pendency of any administrative or judicial proceedings under this statute, the student must remain in his current educational placement. Thus, throughout this litigation, the school district has provided for the student's placement at Benedictine and will continue to do so until the case is finally resolved. The plaintiffs may choose to appeal the district court decision to the Fourth Circuit Court of Appeals. 4

5 Workers Compensation Willey v. Williamson Produce In Willey, the North Carolina Supreme Court reversed the Court of Appeals in ruling that proof of the presence of drugs and alcohol in deceased truck drivers blood does not create a rebuttable presumption of impairment under The court reaffirmed that an employer must establish a causal link between a worker s intoxification or impairment and a work place accident before benefits are denied under an impairment or intoxification defense. Knight v. Wal-Mart Stores, Inc. The Supreme Court affirmed the Court of Appeals in ruling that temporary total benefits were to be paid during a workers healing period, and that those benefits need not end upon that worker s reaching maximum medical improvement, but might continue so long as he was submitting to treatment, convalescing or unable to work. Lemley v. Colvard Oil Co. Relying on general principals of contract law, the Court of Appeals reversed the Commission in holding that a memorandum of settlement signed by both parties at a mediated settlement conference where an agreement was reached, serves as a valid compensation settlement agreement subject to approval by the Industrial Commission pursuant to Rule 502 (1). Smith v. Goldkist The Court of Appeals affirmed the Commission s denial of benefits in an occupational disease case on the basis of insufficient medical and other evidence linking plaintiff s long term asthmatic condition with her employment. Plaintiff s doctor acknowledged a variety of potential reasons for plaintiff s condition, including a history of smoking, in conceding the difficulty in proving the extent to which this occupational exposure was responsible for her current condition. Dodson v. Dubose Steel Corp. Plaintiff s decedent while on the job delivering steel for his employer got out of his truck to confront another driver following a lane merging incident. The other driver hit decedent with his vehicle, causing injuries that resulted in decedent s death. The Court of Appeals, in affirming the award of benefits by the Full Commission, reasoned that this case was analogous to a work place assault case in which the arising out of question pivots on whether the assault originated in something related to the job. The court reasoned that because the decedent s injury and death stemmed from the lane merging incident, and merging is an aspect of driving, and driving is in the basic nature of his job as a driver, the injury might then be deemed to have arisen out of the employment period. The Supreme Court of North Carolina, in reversing the Court of Appeals, drew a distinction between assaults in the work place between coworkers and an assault upon an employee by an outsider resulting from something personal between them and not reasonably related to the employment. The Supreme Court found further grounds for reversing under an increased risk analysis which requires a finding that the employee s injury was caused by an increased risk incidental to the employment. The court reasoned that the risk of confrontations while driving ( road rage ) is not unique to employment as a truck driver. Hunt v. N.C. State Univ. The Court of Appeals, in affirming the Commission s award of permanent partial disability compensation, and denial of a permanent and total disability claim, noted that the fact that a doctor gives an opinion of permanent and total disability at some point in his testimony does not automatically shift the burden to defendant to prove that employee had retained wage earning capacity. The Court also considered whether plaintiff was entitled to submit evidence of a change of condition which arose between the hearing before the Deputy Commissioner and the hearing before the Full Commission. In answering that question in the negative, the Court reasoned that such change of condition evidence was more appropriate for a Full Evidentiary Hearing, and not appropriately before the Full Commission. McGrady v. Olsten Corp. Plaintiff, a 50 year old a certified nurse assistant, who provided such in-home care to patients as bathing, cooking, driving, etc., fell from a tree while trying to grab a pear for one of her patients. The Full Commission reversed Deputy Commissioner Taylor in determining that such an activity (climbing a tree) was a contemplated action of plaintiff s employment, and as such, arose out of the employment. In affirming, the Court of Appeals applied and acting for the benefit to the employer to any appreciable extent test in deciding this was a compensable claim. Sprinkle v. Lilley Industries, Inc. The Court of Appeals affirmed the Commission s award of benefits to an employee injured while driving to a client s plant. The Court decided that even though the employee was not paid a formal travel allowance, a recent salary raise intended to cover employee s increased travel costs should be treated as such and would then come within the travel allowance exception to the coming and going rule. Wedderburne v. LeBlue Corp. The Court of Appeals rejected employer LeBlue s Seagraves argument that an employee s misconduct constituted a constructive refusal to work thereby permitting it to cut off that employee s compensation benefits. The Court distinguished this case from Seagraves on the facts. Namely, LeBlue was precluded from making the Seagraves argument because it failed to document the employee s misconduct, or to give him written or verbal warnings, until weeks after the comp claim was filed. The moral of the story: Write up an employee s misconduct when it occurs and not after that employee reports a compensable injury. Knight v. Abbott Labs The Court of Appeals determined that an employee s argument with an abusive supervisor which left her so upset that she could never work again was not an accident as defined under N.C. Gen. Stat. 97-2(6). The Court reasoned that the reality of an abusive supervisor is not particular to any profession, and that in this case the events themselves did not result in injury, but rather that it was plaintiff s emotional response to the meeting that resulted in her psychological harm. Roberts v. Century Contractors, Inc. The Court of Appeals, in affirming the Commission, reasoned that compromise settlement agreements, including mediated settlement agreements in workers compensation cases, are governed by general principles of contract law, and that where both parties to a settlement agreement mistakenly thought that plaintiff had reached MMI (based on misinformation by plaintiff s treating physician), there had been no meeting of the minds as to all essential terms of the agreement, and that that settlement agreement could be set aside pursuant to N.C.G.S The Commission had found as fact that the finding of MMI and the impairment rating were material to the settlement of the claim and that both parties had relied on that information in entering into settlement negotiations. 5

6 Insurance Coverage Law CATCH 22B-1 and Woodson A recent case from the North Carolina Court of Appeals significantly limits an insurer s duty to defend and indemnify its insureds for contractual obligations, and for indemnity obligations in constrution contracts. This case also impacts the defense of Woodson cross-claims for indemnity. The standard commercial general liability ( CGL ) policy contains and exclusion for Contractual Liability assumed by the insured. The exclusion provides that there is no coverage for bodily injury or property damage for which the insured is obligated to pay damages by reason of the assumption of liability in a contract or agreement. The exclusion contains a proviso excepting liability that the insured would have in the absence of the contract or agreement, i.e., tort liability, and excepting an insured contract. The policy defines an insured contract to include, among other things, That part of any other contract pertaining to your business under which you assume the tort liability of another The insured contract exception to the exclusion thus means that the policy affords coverage for indemnity obligations entered into by the insureds in its business. North Carolina courts have construed the contractually assumed liability exclusion in two cases. In the first such case, Bruce-Terminix Co. v. Zurich Ins. Co., 130 N.C. App. 729, 504 S.E.2d 574 (1998), the court found the exclusion ambiguous with respect to a claim brought by a consumer suing Terminix for defective termite services. The court explained: Based on those allegations, among others, Toomer brought the following causes of action in his lawsuit: 1) violation of his equal protection and due process rights under the state and federal constitutions; 2) violation of his right to petition for redress of grievances under the First Amendment; 3) tortious invasion of privacy; 4) gross negligence; 5) civil conspiracy; and 6) breach of contract. 130 N.C. App. at 736, 504 S.E.2d 579. This language suggests that North Carolina courts could hold that the assumed liability exclusion is always ambiguous. However, the Terminix case can be limited to its facts, since the insurer effectively conceded coverage at oral argument, in that case, and Terminix always contracts with consumers for its business. More recently, in another case, the Court of Appeals held that the contractually assumed liability exclusion was enforceable as to all breach of contract clams against the insured. The case also sheds new light on the operation of the antiindemnity statute, N.C. Gen. Stat. 22B-1. In Penn. National v. Associated Scaffolders and Equipment Co., Inc., 579 S.E.2d 404 (2003), the insured, Comfort, agreed to indemnify a scaffolding company, Associated, for all suits and action, including attorney s fees and all costs of litigation and judgment of any name and description arising out of or incidental to the performance of this contract or work performed thereunder. A third-party action was filed by a Comfort employee injured in the use of the scaffolding. Associated then filed a thirdparty complaint against Comfort for express indemnity (which avoids the exclusivity provisions of the Workers Compensation Act pursuant to N.C. Gen. Stat In a prior action between the parties, Jackson v. Associated Scaffolders and Equipment Co., Inc., 152 N.C. App. 687, 568 S.E.2d 666 (2002), the court held that this indemnity provision was invalid, as a matter of law. In Jackson, the Court of Appeals held that the indemnity agreement between Comfort and Scaffolding violated N.C. Gen. Stat. 22B-1. Significantly, Associated (promisee) argued in Jackson, that the language of the indemnity provision did not violate 22B-1, because Associated was only seeking damages caused by the negligence of Comfort (promisor). The Court of Appeals disagreed. It held that the broad language of the agreement contravened 22B-1 and that the invalid provisions could not be severed or written out of the contract. The court explained that to alter the effect of the language the court would be required to add language, rather than simply excise portions of the agreements which violate the statute and that Courts cannot under the guise of construction rewrite contracts executed by litigants. Id. at 691, 668. In the follow-up insurance case, Penn. National, the court construed the insurance policy issued to Comfort to determine whether the insurer was obligated to reimburse Comfort for costs incurred by Comfort in defending the indemnity/breach of contract third-party complaint filed by Associated The court held that the insurer had no duty to defend or indemnify Comfort for costs incurred in the action The court reasoned: Although at the time of the complaint the contract had not yet been adjudicated void, an insurer will not be obligated to defend its insured when the insured has stepped outside the protective bounds of the General Statutes An insurer may assume that its insure will fall within the law and not obligated the insurer to defend an illegal contract. The court therefore held that there was no duty to indemnify or defend an insured who enters into an indemnity agreement that violates 22B-1. Penn National thus instructs that in every case in which an insured is sued for breach of an indemnity obligation, the insurer must examine the validity of the indemnity provision If the provision is invalid, the insurer has NO DUTY TO DEFEND In examining the validity of the provision, if it purports to indemnify the promisee for ALL COSTS, DAMAGES, AND EXPENSES ARISING FROM THE WORK, or other broad language, the provision is invalid and cannot be salvaged Virtually the ONLY contract that will not violate N.CGenStat 22B-1, is one in which the promisor agrees to indemnify the promise for the negligence of the promisor. Ironically, the indemnity provision is worthless in most construction cases because a promise (typically a general contractor) will never be held vicariously liable for the acts of a promisor (typically a subcontractor) due to the independent contractor relationship. The second issue in Penn. National, was whether the insurer was liable for the costs to defend Associated s breach of contract claim against Comfort in the prior action In prior action, Jackson, Associated had sued Comfort for breach of contract in failing to maintain and use the scaffolding in accordance with OSHA regulations The court held that since the contract contained an invalid indemnity provision, the entire 6

7 contract was void, including the provision requiring OSHA compliance. Thus, the court, in Jackson, affirmed the dismissal for the breach of contract claim. In Penn. National, the court then considered the insurer s duty to defend the prior action in which the contract claim had been dismissed. The court held that the contractually assumed liability exclusion barred coverage for such claim The court reasoned: The Penn. National policy does not cover claims for bodily injury by reason of assumption of liability in a contract except for in an insured contract. An insured contract is defined by the policy as: That part of any other contract under which you assume the tort liability of another party to pay for bodily injury to a third person or organization Tort liability means a liability that would be imposed by law in the absence of any contract or agreement. 157 N.C. App. at 559, 579 S.E.2d at 407. The court concluded that under this provision of the policy, no claim for breach of contract is covered, reasoning that The policy clearly states that the exception which grants coverage applies to tort claims only which would be imposed by law I the absence of any contract or agreement. Id. Therefore, Penn. National had no duty to defend on either count of the complaint. The court, in Penn. National, did not mention the prior case, Terminix, in which the contractually assumed liability exclusion was held ambiguous However, as indicated above, the Terminix case should be limited to its facts. As such, insurers should be entitled to safely rely upon Penn. National in denying a defense and indemnity to first-party claims for breach of contract and invalid claims for indemnity. This now brings us to Woodson, cases, where an insured employer is sued because of conduct on a job site that was substantially certain to cause serious bodily injury or death. Woodson v. Rowland, 329 N.C. 330, , 407 S.E.2d 222, 228 (1991). As you know, an insurer has no duty to defend or indemnify an insured sued for a Woodson violation because it does not satisfy the occurrence or accident requirement in a liability insurance policy. Lyles v. City of Charlotte, 344 N.C. 676, 477 S.E.2d 150 (1996). Nevertheless, it often happens that a defendant in a Woodson / third-party action cross-claims against the insured employer for indemnity or contribution. If the cross-claim is based upon negligence, rather than an express contractual obligation, it is totally frivolous as barred by the exclusivity provisions of the Workers Compensation Act, N.C. Gen. Stat An insurer should not be obligated to defend such a claim, even if it is couched in terms of negligence, because such a claim is still based upon an act that was substantially certain to cause serious bodily injury or death, and hence, is not a covered occurrence or accident. However, until there is some case law on this issue, insurers may choose to defend these invalid cross-claims, since an insurer is obligated to defend frivolous claims against an insured. Significantly, a cross-claim against an employer in a Woodson suit based upon contractual indemnity is permitted under Typically, though, these contractual indemnity claims arise in construction contracts. Again, under Penn. National, if the indemnity agreement violates N.C. Gen. Stat. 22B-1 it is unlawful, and an insurer is not obligated to defend the insured for such an unlawful cross-claim. However, if there is any doubt about the validity of the indemnity agreement, the insurer should defend the employer under a full reservation of rights. The insurer should be careful to advise the insured employer in the reservation of rights letter that it may withdraw the defense after the cross-claims are dismissed from the lawsuit. Although some courts may not permit such a withdrawal, insurers should readily seek the withdrawal to prevent the insured from obtaining a windfall defense for claims that were substantially certain to cause serious bodily injury or death. (continued from page 1) General Liability Litigation When [that entity] claims an interest relating to the property or transaction which is the subject of the action and he is so situated that the disposition of the action may as a practical matter impair or impede his ability to protect that interest, unless the applicant s interest is adequately represented by existing parties. Intervention under Rule 24(a) is called intervention of right and, if the party hoping to join the lawsuit satisfies the requirements of the Rule, intervention shall be allowed. Rule 24(b) of the North Carolina Rules of Civil Procedure also allows permissive intervention. This Rule states that a party may be allowed to intervene when it has a claim or defense that is related in some way to the lawsuit. Generally a carrier should try to avoid this option. As its name suggests, permissive intervention is granted at the court s own option and any decision to deny intervention is unlikely to be overturned on appeal. Further, any appeal of the court s decision could not be taken until the case is fully and finally decided. One potential pitfall is that the request to intervene must be timely. While this term is not defined, intervention before the entry of a judgment will almost always be allowed. At least one court has held that intervention should not be allowed after an entry of default, however, so it best to try to intervene at the earliest opportunity. State Employees Credit Union, Inc. v. Gentry, 75 N.C. App. 260, 330 S.E.2d 645 (1985). In determining whether the request to intervene was made in time the court will look at the status of the case, the prejudice to the existing parties in the case if intervention is allowed, the prejudice to the intervening party if the motion is denied and the reasons for any delay. As the Rule states, courts must answer three questions in order to decide whether to allow intervention of right. First, does the intervening party have an interest in the subject matter of the lawsuit? Second, would denial of the motion to intervene impair the party s ability to protect that interest? Third, are the existing parties adequately protecting the intervenor s interest? Answering those questions from the carrier s perspective, an insurance company has an obvious interest in the lawsuit, since its money is at stake. Disposition of the suit will decide whether the carrier is responsible for paying a claim at all and, if so, the amount to be paid, so if the carrier is not allowed to participate in the case its ability to protect its interests will almost certainly be impaired. Where a defendant cannot be located, it is unlikely that the insurer s interests will be adequately represented. In the typical situation of a missing defendant, intervention of right will usually be allowed. Assuming intervention is granted, what happens then? Most of these questions remain unanswered. Courts may allow intervention but then require the insurance company to become a party to the action and defend in its own name. The Court of Appeals, in the recent case of Morin v. Sharp, 144 N.C. App. 369, 549 S.E.2d 871 (2001), held that a carrier was not unfairly prejudiced when it was required to appear in a pending suit as the insurance company rather than the named defendant. While carriers can and do argue that appearing in their own name is prejudicial and waives the protections of the Rules of Evidence which prohibit introducing evidence of liability insurance to juries, this argument seems to have met with little success. The result is that the carrier will often be forced to sit before a jury without an insured present, either in person or in name. Defense counsel should try to convince the judge that the carrier should be allowed to defend in the insured s name, but this is unlikely to succeed. Another issue is whether an insurer can raise all of the defenses afforded to a named defendant. Presumably the carrier can do so, alleging improper service or contributory negligence, for example, but there is no case law on the issue at this time. What if the insured reappears later in the case? Again, no cases 7

8 address this situation. It stands to reason the carrier could withdraw from It is also important to remember that defense counsel generally the case and its counsel could then take over defense of the insured in his or can file a motion for an extension of time to answer on behalf of the missing insured. Cases have repeatedly held that a request for an extension of her name, but this is an issue that will probably be determined by appellate decisions in the future. time is not a general appearance for a client and so, presumably, can be What is the practical impact of Dunkley? As a practical matter done without running afoul of the rule set out in Dunkley. plaintiff s attorneys will often consent to motions to intervene or at least Dunkley has changed the landscape of the insurance defense practice. The full effect of the decision is not known, however. There have only will not actively oppose them. The obvious reason for this is that the odds of having coverage denied may go down if the carrier is allowed to participate in the defense of the case. Some plaintiff s attorneys will almost cer- to clarify the limits and effect of the ruling. As the case law answers some of been a handful of cases citing to Dunkley and none of those has done much tainly take a harder line, however, hoping to force the carrier into a favorable settlement. requirements for representing the missing insured. the questions raised we will keep you updated on any changes in the Civic / Professional Notes In October 2003, RICHARD BOYETTE, of our Raleigh office, was installed at President-Elect of the Defense Research Institute (DRI), the 21,000 member organization of civil defense attorneys, at the DRI annual meeting in Washington, D.C. Richard will assume the presidency of DRI at its annual meeting in New Orleans during the first week of October, DONNA RASCOE, of our Raleigh office, was a recent speaker at the Center for School Leadership Development in Chapel Hill. Donna participated in the Center s Fall Law Update for school administrators by teaching a session on special education law. ROBERT JONES, of our Wilmington office, was interviewed on December 15, 2003, for a program segment on the show Carolina in the Morning, WWAY TV News 3. Robert was interviewed regarding liability for social hosts of holiday parties. RACHEL ESPOSITO, of our Raleigh office, was a panel speaker at the Council on Education Management s Workers Comp Update on February 2, Rachel discussed the implications of employment laws, such as the Americans With Disability Act, Family Medical Leave Act, and Retaliatory Employment Discrimination Act, on workers compensation claimants. AMY NUTTALL and DAVID RHOADES, both of our Raleigh office, and NICK VALAORAS, of our Charlotte office, presented a program about the Health Insurance Portability and Accountability Act (HIPAA) to the Charlotte office of Zurich North America. The program consisted of an overview of HIPAA regulations, with emphasis on the process for obtaining medical records. Attendees received continuing education credits for this program. TRISH HOLLAND, of our Raleigh office, was recently recognized by Business North Carolina magazine as a member of the Legal Elite in the area of employment law for the third consecutive year. The members of the Legal Elite were elected by their peers in 12 business-related categories. The magazine mailed ballots to more than 16,500 lawyers licensed by the State Bar living in North Carolina. ROBIN DAVIS and JENNIFER ADDLETON, of our Raleigh office, presented a program on Records Management Retention to a group of our clients on February 24, SCOTT FULLER, of our Raleigh office, was a speaker at the Workers Compensation Annual Meeting in Greensboro in February, Scott s topic was Suitable Return to Work issues. Scott has also been named as editor of the workers compensation section s publication, The Course and Scope. JONATHAN ANDERS, of our Raleigh office, recently passed the workers compensation specialization examination, and is now certified as a specialist in this area. RACHEL ESPOSITO and JOE CHAMBLISS, of our Raleigh office, have been involved in pro bono work on behalf of the Urban Ministries of Durham regarding an appeal currently pending before the Employment Security Commission of North Carolina. ROBIN DAVIS and RACHEL ESPOSITO, of our Raleigh office, were contributing writers to a 2004 publication of the Defense Research Institute s (DRI) Defense Library Series, the Employment Law E-Desk Reference. Robin and Rachel co-authored a chapter on Separation Agreements and Releases, which addresses the complex issues that employers face with dealing with an employee s separation of employment, waivers of liability, and formalizing these agreements in writing. The thirty-two (32) chapters of this DRI publication include a comprehensive overview of federal employment law and were authored by prominent employment defense lawyers across the nation. TRICIA CREECH, a paralegal in our Raleigh office, has been appointed as Advertising Editor for the NCPA Forum, a publication of the North Carolina Paralegal Association. 8

9 Recent Case Results A team of attorneys from CSH recently won a decisive victory in an environmental contamination case in Wake County Superior Court. BILL POLLOCK, GEORGE SIMPSON and GINGER HUNSUCKER, all of our Raleigh office, assisted by numerous other attorneys and paralegals, obtained a complete defense victory in the case of Potter et al. v. Aqua Resource Corporation et al. The suit was filed by 75 plaintiffs against a developer of a subdivision and the operator of the private water system serving that subdivision. The plaintiffs alleged that high levels of arsenic, iron, and manganese in the water caused health problems and property damage, and sought $75 million in actual damages, as well as punitive damages for the defendants' alleged misrepresentations about the quality of water provided to the subdivision. In particular, the plaintiffs had alleged numerous health problems that they asserted were due to the defendants provided them with unsafe and undrinkable water for over 10 years, alleging problems ranging from neurological problems, increased risk of cancer, increased risk of heart attacks to dry skin and kidney stones. The plaintiffs alleged they have suffered damages to appliances and clothing in their homes due to staining from the iron and manganese, and that the values of their homes and plummeted due to publicity over the poor water quality in the neighborhood. The plaintiffs further alleged that the defendants action violated state environmental regulations and that the defendants knew of these problems and failed to disclose them to the customers of the water system and to state regulators. This case had been pending for several years, and the plaintiffs had shown no interest in settling the case, despite hundreds of depositions and pre-trial motions. A three-day mediation was conducted that required the renting of several hotel ballrooms to accommodate all the parties. Additionally, the plaintiffs had generated some notoriety through television and newspaper coverage about the quality of water provided to the subdivision. The case was tried before Judge Henry W. Hight, Jr. in a special setting of Wake County Superior Court. Testimony was received from the plaintiffs for over five weeks, and included testimony from each household, as well as from a state toxicologist and medical experts on behalf of the plaintiffs who testified that the plaintiffs would require lifelong medical monitoring to assess future health problems. Our team was able to exclude expert testimony from many of the plaintiffs experts and to limit the remaining testimony so that at the close of evidence from the plaintiffs, the trial judge granted a directed verdict on all claims other than negligence. After the defense put on its testimony, the jury deliberated for 2 days and returned a finding of no negligence. The defendants currently have post-trial motions pending seeking over $500,000 in attorneys fees and costs. It is unclear whether the plaintiffs will appeal, but the record at trial makes it unlikely this verdict would be overturned. PATRICIA L. HOLLAND, RACHEL ESPOSITO and ALY- CIA S. LEVY, all of our Raleigh office, prevailed at an early motion to dismiss involving a former employee-plaintiff who had filed both breach of contract claims and a tort claim of wrongful discharge invoking the North Carolina Controlled Substance Examination Regulation, N.C.G.S. s , et seq. The plaintiff thought that he had been unlawfully terminated because a random workplace drug test of his sample had produced what he claimed was a false positive, and he had obtained a second test yielding a negative result for illicit drug use. Prior to any answer being filed, the court dismissed all claims with prejudice. BUCK COPELAND, of our Raleigh office, recently won a case before the Full Commission. The case arose out of a compensable hernia claim. Within a couple of days of being discharged from the hospital for the hernia surgery, the plaintiff developed pulmonary problems that ended up disabling him for many years. The medical expenses and indemnity exposure were enormous. The plaintiff's treating pulmonologist testified that the plaintiff s pulmonary condition was related to his hospitalization for the hernia surgery. Based on this, the Deputy Commissioner awarded the plaintiff continuing temporary total disability benefits and required the defendants to pay for all of plaintiff's medical expenses related to his pulmonary condition. The Full Commission reversed and found the testimony of defendants' two expert pulmonolgists, one from Duke and the other from ECU, to be more persuasive than the testimony of the treating physician. Those experts, who performed IMEs on the plaintiff and reviewed all of the medical records, testified that plaintiff's pulmonary condition was not related to his hernia hospitalization. Based on this, the Full Commission denied the plaintiff any further TTD benefits and found that the defendants were not responsible for the pulmonary medical expenses. RANDY LEE and DAVID WARD, of Raleigh office medical malpractice section, obtained a defense jury verdict in Wayne County Civil Superior Court. David and Randy represented an emergency physician in a failure to diagnose a heart attack case. Plaintiffs attorneys alleged that due to plaintiffs presenting complaints, which included chest pain and shortness of breath, our client should have ordered additional diagnostic studies looking for heart disease. The decedent died of a massive myocardial infarction approximately four hours after she was discharged from the emergency department by our client with a diagnosis of atypical chest pain and probable gastritis. After a trial that lasted over two weeks and included numerous experts including cardiologists and emergency physicians, the jury returned a verdict in favor of the defendant. JAYE BINGHAM and ROB GRIFFIN, of our Raleigh office, recently won a decision before the North Carolina Supreme Court. In the case of Brown v. Millsap, NC, rev. N.C. App., 588 S.E.2d 71 (2003), the plaintiff won a jury verdict at trial, with damages of just less than $10, Plaintiff made a motion for attorney fees pursuant to N.C.Gen.Stat The trial judge ruled that attorney s fees were not available, since after adding pre-judgment interest to the jury verdict, the award exceeded the statutory threshold of $10, The plaintiff appealed, and the North Carolina Court of Appeals ruled in the plaintiff s favor. The defendant appealed that decision to the North Carolina Supreme Court. Jaye and Rob prepared and filed an amicus curiae brief on behalf of Nationwide Insurance Company. The case was heard in the North Carolina Supreme Court on March 17, 2004, and on April 2, 2004, the Supreme Court reversed the North Carolina of Appeals and ruled in favor of the defendant and our client. NICK VALAORAS, of our Charlotte office, recently won a case before the North Carolina Industrial Commission. Plaintiff s mother sought to recover death benefits for the death of her son in a workers compensation claim. The son/employee was morbidly obese, and had a compensable acci- 9

10 Recent Case Results dent at work, where he fell and injured his leg. The employee missed some time from work as a result of the leg injury. Several months later, he was hospitalized with shortness of breath and died the next day from a massive pulmonary embolism. The plaintiff tried to link the embolism to a blood clot which presumably formed after the leg injury. The plaintiff argued that the leg injury caused him to be physically immobile and inactive for a period of months, placing him at an increased risk of developing a blood clot in the leg and then the resulting pulmonary embolism. Plaintiff s treating internal medicine physician and plaintiff s expert cardiologist testified favorably for the plaintiff, while the defense expert cardiologist testified favorably for the defense. The Deputy Commissioner ruled in favor of our client, and the case is on appeal to the Full Commission. PATRICIA L. HOLLAND and RACHEL ESPOSITO, of our Raleigh office, recently received a favorable ( no-cause ) determination from the Equal Employment Opportunity Commission in their representation of a non-profit organization where a female employee had filed a Charge of Discrimination alleging retaliation for having engaged in the protected activity of complaining about alleged sex and race discrimination and/or harassment. She had also submitted a lengthy, detailed affidavit to the Equal Employment Opportunity Commission ( EEOC ) alleging that racy and racist comments were frequently made by her supervisor who was subsequently terminated from employment. We urged the EEOC to dismiss the Charge on the ground that the female employee, despite having engaged in a protected activity, had suffered no adverse employment action -- no tangible action that adversely affected the terms or conditions of her employment. The EEOC apparently agreed and dismissed the Charge finding that the evidence was insufficient to establish any violation of Title VII of the Civil Rights Act of ROBERT JONES, of our Wilmington office, recently prevailed in an insurance coverage suit in Pender County Superior Court. The case involved a coverage dispute regarding a mobile home damaged in Hurricane Floyd. Plaintiffs argued that they had flood insurance from our client. We successfully argued that the plaintiffs had failed to procure flood insurance, and that their hazard insurance had expired due to their failure to remit the coverage premium. The Court granted our motion for summary judgment. HOUSTON FOPPIANO, of our Raleigh office, recently won a jury trial in Wake County Superior Court. Our client admitted negligence in causing a rear-end motor vehicle collision. Plaintiff had lower back complaints, with no permanency rating, but the bulk of his claim came from his contention that the accident had caused venous stasis in his lower right leg, which in turn caused stasis dermatitis, resulting in permanent pain, discoloration and swelling of the lower leg. Plaintiff claimed that his medical bills were approximately $33,000.00, along with claims that the injuries had affected his productivity in running a document management business. We claimed that the leg condition was caused by his morbid obesity, and was unrelated to any injuries from this motor vehicle accident. The plaintiff s attorney requested $300, in damages from the jury in his closing argument. We requested that the jury return a verdict of only $10, in damages, and in fact, the jury returned the verdict in that amount. BETH FLEISHMAN and MIKE ALLEN, of our Raleigh office, recently prevailed in a medical malpractice claim alleging wrongful birth. Plaintiff contended that care provided by our client, a national pharmacy provider, caused the unwanted birth of a child. Defendant challenged the validity of this legal theory under North Carolina law and moved to dismiss the matter. After considering the arguments of the defendant, counsel for plaintiff voluntarily dismissed the claim. MIKE ALLEN and MEREDITH BLACK, of our Raleigh office, recently obtained summary judgment and dismissal of all claims against our client, a national pharmacy provider. In this malpractice claim, the plaintiff, who happened to be a physician, contended that her care and treatment for cancer led to an acute bleeding event, prolonged hospitalization, and increased risk of future cancer development. After considering defense arguments, the Court dismissed our client and permitted the claim to continue against the remaining defendant. LEE EVANS and MIKE ALLEN, of our Raleigh office, recently obtained summary judgment and dismissal of all claims in a wrongful death medical malpractice action. Plaintiff contended that our client, a community hospital provider, failed to appropriately interpret radiology studies, leading to the delayed diagnosis of breast cancer. DAVID WARD and MIKE ALLEN, of our Raleigh office, recently prevailed on a motion to dismiss all claims against our client in a medical malpractice claim. The plaintiff contended that the defendant hospital violated accepted treatment standards and practices during the diagnosis and management of a psychiatric disorder. MIKE ALLEN, of our Raleigh office, recently obtained a favorable result for our client, a community pharmacy provider, in a disciplinary action before the North Carolina Board of Pharmacy. Allegations in the matter included inadequate supervision of pharmacy staff and inadequate control of drug inventory, ultimately leading to the death of a young adult secondary to a drug overdose. After considering evidence and testimony in the matter, the Board of Pharmacy dismissed all charges and allegations in their entirety. RICHARD BOYETTE and ALYCIA LEVY, of our Raleigh office, have successfully defended two lawyers and their law firm against claims of trespass and invasion of privacy at the trial court level. A client of the defendant lawyers engaged private investigators to surreptitiously contact an individual and his lawyer (both of whom were plaintiffs in this suit) to see if either would disclose the terms of a confidential settlement agreement from a previous suit by the individual against the client of the defendant lawyers. The plaintiff lawyer s claims for trespass and invasion of privacy were dismissed on the pleadings. Because the individual was a resident of the Netherlands, and conduct of the investigators of which he complained took place in the Netherlands, it appeared that Dutch law would apply. After obtaining research assistance from a Dutch law firm, and affidavits necessary to establish the controlling principals under Dutch law, the individual's claim was dismissed on a motion for summary judgment. NORWOOD BLANCHARD, of our Wilmington office, recently obtained summary judgment on behalf of a town in a case involving an Emergency Management Act immunity issue. The case, which arose out of 10

11 Recent Case Results the town's operation of a municipal dam during a hurricane, had proceeded to trial earlier and the plaintiffs had taken a voluntary dismissal after the trial judge indicated that a directed verdict was forthcoming. After the plaintiffs refiled the case, Norwood was able to secure summary judgment without conducting any additional discovery other than a follow-up set of written discovery. TRISH HOLLAND, of our Raleigh office, and NORWOOD BLANCHARD, of our Wilmington office, successfully defended an appeal before the United States Court of Appeals for the Fourth Circuit. The plaintiff had appealed the trial court s dismissal of his race discrimination case, which had been dismissed before it became necessary to file an Answer. The result was particularly favorable because it saved our client the time and expense associated with the discovery process. NORWOOD BLANCHARD, of our Wilmington office, successfully defended a discrimination charge filed with the United States Equal Employment Opportunity Commission (EEOC). The charging party, who had been employed by a large media company, alleged that her termination was motivated by sex or pregnancy discrimination. After reviewing the position statement in opposition to the charge, the EEOC issued a no cause determination and dismissed the charge. BOB SUMNER and GLORIA BECKER, of our Raleigh office, obtained a defense verdict in a jury trial arising out of a head-on collision that the plaintiff claimed was caused by the defendant driver s reckless conduct of playing a game of chicken. The plaintiff was a passenger in a pick-up truck driven by a co-defendant. The co-defendant was dismissed from the lawsuit prior to the trial. The defendant was driving a commercial truck in the course and scope of his employment. The plaintiff claimed that the defendant initiated the game of chicken by first steering out of his lane of travel, crossing the center line into the plaintiff s lane of travel, then swerved back into his proper lane only to swerve across the centerline and back before the collision. The plaintiff contended that his vehicle was an unwilling participant and that it only moved out of proper lane after the defendant s truck crossed the centerline. The plaintiff s evidence showed that all parties involved in the accident knew each other through work and that the defendant recognized the plaintiff s vehicle and its driver prior to the collision. Additionally, the plaintiff presented evidence that the defendant had played chicken with several of the plaintiff s co-workers on six different occasions prior to the accident in question. On each occasion, the defendant driver was allegedly operating the same commercial vehicle in the course and scope of his employment. The defense theory was that the driver of the plaintiff s vehicle initiated the game of chicken and that the defendant driver attempted to avoid the collision by crossing the centerline. The defendant testified that he came around a curve and then saw the plaintiff s vehicle cross the centerline into his lane of travel. The defendant hit the brakes but the plaintiff s vehicle never moved. The defendant attempted to avoid the collision by veering across the centerline but after he had initiated this move, the plaintiff s vehicle then swerved back into its lane colliding with the defendant. The defense expert who performed an accident reconstruction testified that there was not enough sight distance between the two vehicles for the defendant to have initiated the game of chicken and that the physical evidence at the scene of the accident, including the skid marks left by the vehicles, the angle of the vehicles at impact, and the damage sustained by the vehicles, supported the defendant s version as to how this accident occurred. After less than 30 minutes of deliberation the jury returned a no negligence verdict in favor of the defendant. Prior to trial, the plaintiff had demanded $1,000, to settle the case. GLORIA BECKER, of our Raleigh office, obtained summary judgment in favor of a fast food restaurant in a food products liability case where the plaintiff claimed that he broke his tooth after biting down on a hard object. Mrs. Becker presented evidence of the defendant s cleanliness rating and precautionary measures taken to ensure its customers safety. Additionally, Mrs. Becker argued that the plaintiff failed to produce any evidence to identify the hard object or that the defendant had a duty to safeguard against such hard objects. CATHI HUNT, of our Raleigh office, recently obtained a successful jury verdict in Wake County Superior Court. Cathi represented the plaintiff, a local Town, in an action brought against mobile home park owner for breach of contract for payment for the Town s provision of sewer service to the mobile home park. The jury returned a verdict in favor of our client in the amount of $217, GEORGE SIMPSON, of our Raleigh office, recently prevailed in a case in Wake County District Court. George was representing a grocery store in a slip and fall case. George argued that, as a matter of law, the store was not negligent and that the plaintiff s own contributory negligence caused the accident. The Court granted that motion in favor of our client. ROB GRIFFIN, of our Raleigh office, recently obtained a successful result in Guilford County Superior Court. We represented a volunteer fire department and volunteer fireman, who were sued by a plaintiff injured in a motor vehicle accident with the defendants fire truck. The defendants approached a red light at an intersection, with siren activated and lights flashing, which by statute gave them the right-of-way. The defendant entered the intersection, while other cars stopped to yield the right-of-way. The plaintiff s vehicle, however, entered the intersection from the defendants right, and the truck T-boned the plaintiff s car, resulting in severe neck and back injuries to the plaintiff and subsequent fusion surgery. We argued that the defendants were entitled to statutory immunity, since they were responding to a call about a vehicle fire; and that in the alternative, plaintiff was contributorily negligent as a matter of law for failing to yield the right-of-way. The Court granted our motion for summary judgment, ruling specifically that the plaintiff was contributorily negligent as a matter of law. KARI JOHNSON, of our Raleigh office, recently obtained a dismissal in federal court. We presented an emergency room physician, who was sued by a prisoner claiming that the medical care rendered to him by the defendant was inadequate, and amounted to cruel and unusual punishment. The federal court ruled in our favor and dismissed all pending claims against defendant. JAY TILLMAN, of our Raleigh office, was recently successful in a motor vehicle negligence case in Wilson County Superior Court. After we defended the case for 1-2 days before a Wilson County jury, the plaintiff s attorney filed a voluntary dismissal without prejudice rather than proceeding with the remainder of his case. 11

12 Recent Case Results ROBERT JONES, of our Wilmington office, was recently successful in federal district court. We prevailed on our objection to a motion by a third party defendant (a California corporation) to dismiss our cross claims on the grounds that the Court could not exercise its personal jurisdiction over the California corporation. The Court ruled in our favor, finding that the Court did have personal jurisdiction over the third-party defendant, and that our client s cross claims against the third-party defendant could go forward. BOB SUMNER and GLORIA BECKER, of our Raleigh office, successfully argued a motion to dismiss a Complaint filed by a father against his minor son arising out an golf cart accident. The father claimed that he was injured as a result of his minor son s negligent driving of the golf cart. The defense argued that the minor son was protected by the parent-child immunity. Specifically, the defense argued that the statutory exception to the parentchild immunity found at N.C. Gen. Stat solely applied to automobile accidents and thus, did not eliminate the minor s son immunity from a lawsuit arising out of a golf-cart accident. The court dismissed the lawsuit and held that the minor son was protected by the parent-child immunity. STEPHANIE AUTRY and RACHEL ESPOSITO, of our Raleigh office, obtained a dismissal, prior to discovery, of a wrongful death action against a superintendent of a public school system where governmental immunity defenses applied to most of the asserted claims. MARSHALL WALL, of our Raleigh office, recently obtained a summary judgment for our client in Wake County Superior Court. Plaintiff claimed that she went through the drive-through line at a local fast food restaurant, and after leaving the restaurant, allegedly bit down on a staple in her french fries. She claimed dental injuries, including two cracked teeth. Our motion for summary judgment was granted, prior to trial, on the basis that plaintiff had offered no evidence showing active negligence by the store, and failed to obtain any expert opinion evidence linking the alleged incident to her dental problems. RICHARD BOYETTE and MARSHALL WALL, of our Raleigh office, obtained a summary judgment in Wake County Superior Court. The plaintiff sued our client, a local ice skating rink, claiming that a teenage boy, who was engaged in boisterous horseplay, knocked her down while she was skating. She alleged that the ice rink was, or should have been, aware of the boy s conduct because it had been going on for some period of time prior to the incident. Plaintiff also alleged that the rink did not have adequate safety personnel, and that it failed to properly train its employees. The plaintiff claimed that she suffered a closed head injury, including a long period of total amnesia, permanent loss of the sense of smell and sense of taste and other neurological injuries. No eyewitnesses saw the alleged incident occur. Our motion for summary judgment was granted based upon the plaintiff s failure to prove that she was, in fact, struck by another skater, and her failure to prove that, even if another skater did bump her, that the rink was at fault. DAVE BATTEN and AMY NUTTALL, of our Raleigh office, won a jury trial on behalf of a Texas neurosurgeon in the United Stated District Court for the Eastern District. Plaintiff alleged that a laminectomy was both unwarranted and negligently performed. She presented evidence of total disability and sought 1.5 million dollars. Plaintiffs presented two North Carolina orthopedic surgeons in this case. The jury returned a verdict for the defense after a brief deliberation. TRISH HOLLAND and ADAM NEIJNA, of our Raleigh office, and NORWOOD BLANCHARD, of our Wilmington office, successfully defended a lawsuit filed against a police officer in which the plaintiff alleged that the officer had used excessive force, made a false arrest, violated his constitutional rights, inflicted severe and extreme emotional distress, and otherwise violated the plaintiff s rights. The plaintiff alleged that on the date in question, the off-duty officer had no authority to conduct an arrest and when doing so used an inappropriate amount of force. After taking extensive discovery, deposing all the witnesses and investigating the case, the Defendant filed a Motion for Summary Judgment as to all claims. After filing his Motion for Summary Judgment and Supporting Memorandum of Law, the Motion was granted and the complaint was dismissed in its entirety. TRISH HOLLAND, of our Raleigh office, recently represented the Chief of Police of a Town in an administrative hearing challenging the demotion of a police captain to the rank of Police Officer III. The Deputy Town Manager who presided over the grievance hearing upheld the decision of the Chief of Police to demote the former captain. TRISH HOLLAND, of our Raleigh office, successfully represented the Chief of Police of a City in an administrative hearing before the City s Personnel Appeals Committee in which a former police Lieutenant challenged his termination from the City s Police Department. The Personnel Appeals Committee upheld the decision of the Chief of Police to terminate the former Lieutenant. ROBIN DAVIS and ALYCIA LEVY, of our Raleigh office, prevailed in having a wage and hour class action suit dismissed on Summary Judgment in Wake County Superior Court. Defendant is a day labor agency who employed the plaintiffs with temporary jobs on a daily basis. Plaintiffs brought an action alleging that there were improper wage deductions taken from their pay check for transportation charges. Plaintiffs also were trying to allege a new state cause of action for failure to pay for waiting time and travel time. Judge Stephens granted Defendant s Motion for Summary Judgment. TRISH HOLLAND and CATHI HUNT, of our Raleigh office, were able to convince a former employee plaintiff to take a voluntary dismissal with prejudice of the slander action he brought against his former co-worker who reported his violation of the employer s drug policy to the employer. DAN HARTZOG and KARI JOHNSON, of our Raleigh office, obtained a dismissal of all claims against a municipality in a federal action wherein the plaintiff alleged that the defendants violated his constitutional rights when they allegedly unlawfully entered plaintiff s home in connection with a drug investigation. TRISH HOLLAND and CATHI HUNT, of our Raleigh office, obtained four no cause determinations from the Equal Employment Opportunity Commission in four separate claims brought by terminated employees of a city housing authority. Following review of the position statements and supporting documents submitted on behalf of the housing authority, the EEOC found no basis for any of the four former employees allegations that each was subject to a hostile working environment and discriminated against on the basis of her gender. 12