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Verdicts & Settlements

Recent Settlements and Verdicts Reported Around North Carolina*

North Carolina Verdicts

Raleigh Jury Awards a Child $9.5 Million

After several weeks of trial, a Wake County jury awarded a child that is now six years old, $9.5 million for permanent brain injury she suffered as a result of a delayed c-section delivery. The mother was only 19 years old at the time of the birth, and she suffered a placental abruption, which left the unborn child without oxygen and nutrients. Plaintiff claimed the attending doctor was preoccupied handling non-emergencies and the inexperienced labor & delivery nurse ignored alarms that could have indicated there was a problem. According to Plaintiff's Counsel, the mother's c-section delivery was critical and the injuries to the unborn child could have been avoided if the doctor and nurse had responded quicker. Today, the six year old suffers from cerebral palsy, cannot walk or talk and requires round the clock care for the rest of her life.

$2.25 million Award Against a Tanker Company in Conservative Carteret County

A 57 year old woman was walking her dogs when a 56 foot tanker truck ran over her with both sets of wheels. The decedent was in a cross walk at an intersection when she was hit. The woman reportedly lived for approximately nine hours, before she died due to blood loss, but immediately after the accident she was awake and oriented for several hours. The estate filed suit alleging negligence of the 21 year old driver that had never driven a tanker truck before being hired by the company. The negligence claims against the tanker company related to negligent training and supervision, and specifically the fact that the young driver was trained to drive the tanker truck using a Honda minivan instead of a tanker truck like he was driving on the day of the accident.

Nine Year Old Child Awarded $1.5 million in Go Kart Case

A Wake County judge awarded a nine year old $1.5 million after she was injured in a go-kart accident. The Court found that the Plaintiff had never driven a go-kart prior to the day of the accident and she could not have appreciated any dangers of a go-kart track. There were four, defendant go-kart attendants that failed to see the Plaintiff get out of her go-kart after it became stuck on a safety rail and make attempts to free it from the railing. The nine year old Plaintiff was struck by another kart, and the Court found that the attendant's failure to timely respond to the child was a proximate cause of her injuries. The child sustained injuries to her foot, which eventually had to be partially amputated.

Recent North Carolina Settlements

Grandmother Struck By a Speeding Golf Cart in a Retirement Community

A wrongful death action involving an elderly resident of a retirement community was settled for $1.7 million, prior to suit being filed. The elderly grandmother was walking through a cross walk in her own retirement community when a speeding golf cart, ran a stop sign and struck the elderly woman. The golf cart was driven by an employee of the retirement community. The estate of the elderly lady made pre-suit claims against the retirement community, including a claim of negligent infliction of emotional distress relating to the elderly woman's daughter that witnessed the entire accident and was diagnosed with post-traumatic stress disorder as a result.

After being struck by the golf cart, the elderly woman was treated for three days in the hospital before she passed away. The matter was settled before a lawsuit was filed for $1.35 million, and as part of the settlement agreement, the retirement community agreed to purchase the decedent's residence for its full asking price of $385,000.

Medical Malpractice Claim Settles for $5.3 Million

During a hysterectomy, a woman suffered vaginal and rectal tearing when a surgical table mechanically folded up into a U-shaped position while the procedure was being performed. The woman sustained tearing to her vagina and rectum, which also resulted in permanent back and vaginal pain. The reported special damages included: medical expenses of $252,214; a life care plan estimating between $3.9 to $4.7 million and future estimated lost wages of $865,000. A confidential settlement of $5.3 million was reached just prior to trial.

* Please note that these cases were reported across the state of North Carolina and were not handled by the law firm of Dean & Gibson, PLLC.

Below is an update of a variety of decisions from the North Carolina Court of Appeals and the North Carolina Supreme Court:

Whigham v. Jackson Dawson Communications and The Hartford

Whigham proposed a kickball game for team-building purposes to his employer. His supervisor approved and instructed him to proceed. Whigham was authorized to purchase t-shirts, refreshments, and to rent a location for the event. During the last play of the event, Whigham shattered his tibia and fibula. The single commissioner, full commission, and Court of Appeals all concluded that Whigham was not in the course and scope of his employment at the time of his injury. The Supreme Court found the opposite.

For an injury to be compensable, it must "aris[e] out of and in the course of employment." S.C. Code. 42-1-160(A). The Court identified three situations in which a recreational activity likely falls within the course and scope of employment: 1) it occurred on premises during lunch or break as a regular incident of employment; 2) the employer brings the activity within the course and scope of employment by expressly or impliedly requiring participation or making it a part of the service of the employee; or 3) the employer derives substantial benefit from it beyond the employee's health and morale.

Based on the facts of this case, the Court found that Whigham was implicitly required to attend and that it was part of his services as an employee. While it may have been voluntary for the others, it was not for Whigham. The Court found that both the employee and employer though his participation was vital to the event and that he was expected to be there. Further, the Court found that the employer's adoption of the event, even though it was an employee's idea, made it part of his employment.

Precision Walls, Inc. v. Liberty Mutual Fire Insurance Co.

Precision appealed the trial court's determination in a declaratory judgment action that found no coverage for the insured because there was no "property damage" or "occurrence" under the policy and the "your work" exclusion applied. Precision installed installation for a project that began to fail during the construction. The general contractor required Precision to repair the work and deducted costs associated the impact on other trades' work from Precision's contract. Precision sought coverage under its CGL policy, which provided for coverage for "property damage" caused by an "occurrence." "Property damage" was defined as "physical injury to tangible property, including all resulting loss of use of that property." An "occurrence" was defined as "an accident, including continuous or repeated exposure to substantially the same general harmful conditions."

The trial court identified the only loss as the removal and reconstruction of a brick wall, which was not "property damage," and also found that it resulted from Precision's non-conforming work, which was not an occurrence under the policy. Further, the loss was a result of Precision's work, and therefore excluded under the "your work" exclusion.

The Court of Appeals agreed with the trial court, finding that the "your work" applied, assuming without deciding that there was "property damage" caused by an "occurrence." Discussing Century Indemnity Co. v. Golden Builders, Inc., 348 S.C. 559, 561 S.E.2d 355 (2002) and Wolde v. Assoc. Ins. Co., 401 S.C. 431, 737 S.E.2d 631 (Ct. App. 2012), the Court found that the loss here was excluded from coverage based on the "your work" exclusion. Further, the Court found no ambiguity in the terms of the policy requiring construction in favor of Precision. Given the application of the "your work" exclusion, the court found no need to determine whether the loss was "property damage" caused by an "occurrence."

Delores Williams, Personal Representative of the Estate of Edward Murry, Deceased, and Matthew Whitaker, Jr., as Personal Representative of the Estate of Annie Mae Murry, Deceased, Appellants, v. Government Employees Insurance Company (GEICO).

The Murrys purchased motor vehicle insurance from GEICO with $100,000/$300,000 limits. They were struck by a train the day after the policy went into effect and both died as a result. GEICO sought to limit the coverage to $15,000 based on a provision in the policy that "Bodily injury to any insured or any relative of an insured residing in the household is not covered." The policy acknowledged minimal limits of liability coverage imposed by law would apply. The personal representatives of the estates lost a bench trial in their declaratory judgment action against GEICO, with the judge determining that the policy limited coverage to $15,000.

The personal representatives argued that the policy was ambiguous, as the Declarations Page provided for $100,000 in coverage for injury to a person contradicted the limitations within, and that the applicable "family step-down" provision was called an exclusion but operated as a limitation. The Supreme Court rejected the ambiguous argument, even if the exclusions were more properly called limitations.

The personal representatives also argued that the "step-down" provision contravened public policy. The Supreme Court acknowledged that parties are generally free to contract and insurers may imposes limits on liability, so long as not in contravention of public policy. The Court agreed with the personal representatives that the "step-down" provision violated public policy, as the Motor Vehicle Financial Responsibility Act prohibits policies that do not "contain a provision insuring named insureds...for death or injury sustained... within the coverage of the policy or contract..." The Act further prohibits any "endorsement, provision, or rider attached to or included in any policy of insurance which purports or seeks to limit or reduce the coverage afforded by the provisions required by" the Act. The Court faulted the trial court's failure to consider the latter when it found that the limitation did not violate public policy by reducing the coverage to $15,000.

The reduction imposed by the limitation in the GEICO policy violated the Act by reducing the coverage required and reducing the policy to the statutory limits was not envisioned by the General Assembly. The Court refused to allow an insurer to determine the amount of coverage from which an injured party can recover based on familial relationship, and rejected collusion between family members as a basis for upholding the family step-down provision.

Solanki v. Wal-Mart

Wal-Mart appealed the award of punitive damages from a gross negligence action and the denial of its motion for JNOV and reversal or reduction of punitive damages. The Plaintiffs purchased items from Wal-Mart, but the cashier incorrectly manually entered their credit card number, which was another person's card. That person reported the error to the sheriff's department, which had a warrant issued for Mr. Solanki's arrest. Mr. Solanki then spent six nights in jail before being transferred to South Carolina from Georgia, where he posted bail. He was indicted for financial transaction theft and fraud, but the charges were dismissed. The trial court granted Wal-Mart's motion for directed verdict on all but the negligence and gross negligence claims. They jury awarded $50,000 in actual damages and $225,000 in punitive damages against Wal-Mart, and found Mr. Solanki to be 25% comparatively negligent.

Wal-Mart appealed on the absence of any evidence of willful, wanton, or reckless conduct that would support punitive damages. It also argued that the Solankis established a heightened duty and failed to show that it deviated from industry standards by not conducting its own investigation before handing the matter to the sheriff's department.

The court summarized the well-established standards for recovering punitive damages and establishing gross negligence, and found that there was sufficient evidence to send the issues to the jury. Such evidence included attempting to run the credit card three times and manually entering the information without confirming the receipt information matched the card. Following well-established law, the Court found no error because there was sufficient evidence to send the issues to the jury in denying the JNOV motions or request for reduction of punitive damages.

INSURANCE COVERAGE
DEFINITION OF HOUSEHOLD RESIDENT
North Carolina Farm Bureau Mutual Insurance Co. v. Paschal
North Carolina Court of Appeals, January 7, 2014
752 S.E.2d 775

After Harley Jessup was ejected from a motor vehicle in a single-car accident, she sought to make a claim on her grandfather's underinsured motorist coverage with Farm Bureau. Farm Bureau responded by bringing a declaratory action to determine whether this coverage applied to Ms. Jessup. At issue was whether Ms. Jessup was a "resident" of her grandfather, Wade Pashcal's, home.

The North Carolina Court of Appeals determined that Harley was, in fact, a resident of Mr. Pashcal's home despite their normally living separately. The court looked at multiple factors in coming to this decision, including the fact that Mr. Pashchal was the predominant caregiver for Harley, he paid all of Harley's living expenses, and acted as her legal guardian while her father was incarcerated.

Additionally, the court looked to the applicable insurance policy itself, which it determined did not define the term "resident." Although Harley may not have been a "resident" of Mr. Pashcal's house in the traditional sense, the court determined that, absent an explicit definition within the policy, the term was flexible enough to fit the mold of Harley's living situation. The matter is currently pending further appeal before the Supreme Court of North Carolina.

PREMISES LIABILITY
LANDLORD LIABILITY FOR DOG BITE
Stephens v. Covington
North Carolina Court of Appeals, February 18, 2014
754 S.E.2d 253

A 9-year-old boy, Joshua Stephens, was visiting with his friend Jeremy Hewett when he was attacked by a Rottweiler named Rocky while Jeremy was attempting to refill Rocky's water bowl. When the Hewetts moved into the home with Rocky, their landlord, John Covington, was aware that the Hewetts owned Rocky. Mr. Covington and the Hewetts determined that the Hewetts should build a fenced-in area in which to keep Rocky given how close together the homes in the neighborhood were. Joshua suffered severe injuries to both his leg and shoulder as a result of Rocky's attack.

Upon reaching the age of majority, Joshua sued the Hewetts and the Covingtons for injuries suffered due to Rocky's attack on him. In 2011, Joshua won a judgment against the Hewetts for $500,000.00. However, the Covingtons' filed a motion for summary judgment that was granted because the trial court determined that there was no evidence to show that the Covingtons, as landlords, knew that Rocky was a "dangerous dog."

The North Carolina Court of Appeals upheld the trial court's ruling, finding that Mr. Covington had no reason to believe that Rocky was a "dangerous dog" despite his being a Rottweiler. Further, the court found that the Plaintiff "did not present any evidence demonstrating that the Rottweiler breed is (even) generally dangerous." Therefore, since Mr. Covington was unaware of any dangerous propensities of Rocky, and no evidence of such a propensity was presented, Mr. Covington had not violated any duties owed to the Plaintiff.

TRIP & FALL
CONTRIBUTORY NEGLIGENCE OF PLAINTIFF
Currin v. Rex Healthcare, Inc.
North Carolina Court of Appeals, February 18, 2014
757 S.E.2d 526

In November 2009, Plaintiff underwent surgery for breast cancer at Defendant Rex Hospital. As part of her continuing treatment plan, Plaintiff was prescribed radiation therapy which was also to be performed at Rex. Prior to her falling in Rex's parking lot on December 9, 2009, Plaintiff had been to Rex eight times in order to undergo her radiation treatments. On December 9, a clear and sunny day, Plaintiff was leaving Rex at 3:30 PM after her second radiation treatment of the day. Upon her exit from Rex, Plaintiff tripped and fell on a six-inch diameter, two-inch tall plastic base that would be used to house a stanchion if traffic needed to be redirected. As a result, Plaintiff suffered a broken nose and lacerations to her knees and face.

Prior to trial, Defendant filed a motion for summary judgment based on the theory that Plaintiff's recovery was barred by her contributory negligence. The trial court granted Defendant Rex's motion, which was upheld by the North Carolina Court of Appeals. In so doing, the court held that Plaintiff was contributorily negligent for tripping over the generally visible base because the evidence showed that she had not exercised ordinary care for her own safety by not looking at the ground around her. The court's reasoning was largely supported by a lack of evidence tending to show that anything could have obstructed Plaintiff's view of the base prior to her tripping over it.

MEDICAL MALPRACTICE
SUDDEN EMERGENCY DOCTRINE NOT A DEFENSE
Wiggins v. East Carolina Health-Chowan, Inc.
North Carolina Court of Appeals, July 1, 2014
760 S.E.2d 323

In 2005, Plaintiff was admitted to Edenton's Chowan Hospital after she went into labor with her son. Prior to providing Plaintiff with a drug to induce labor, nurses at the hospital failed to perform a required vaginal exam. Hours after the provision of the drug, nurses finally performed the requisite exam and discovered the umbilical cord was already exposed. As a result, hospital staff began preparing for, and performed, an emergency C-section. Plaintiff's son now suffers from permanent mental impairments which Plaintiff blames on the tardy performance of the C-section.

In defense of Plaintiff's claims, Defendant plead the doctrine of "sudden emergency," which allows a defendant to act as a reasonable and prudent person would under the same or similar circumstances in defense of a negligence action. However, the court held that this doctrine cannot be applied to a medical malpractice action, in which a medical professional must use a level of care in alignment with the practical standards among members of the same professional community with equal training.

In remanding the case for a new trial, the North Carolina Court of Appeals ruled that, even in medical emergencies, medical professionals are held to a higher standard than that of the "reasonable and prudent person" and must act as a "reasonable healthcare professional." The court further found that sudden medical emergencies are already embodied within the "reasonable healthcare professional" standard because a large part of the medical profession is to act under emergency medical circumstances.

TORT/NEGLIGENCE
WAIVER OF LIABILITY BY PARENT ON BEHALF OF MINOR CHILD
Kelly, et al v. United States
United States District Court for the Eastern District
7:10-cv-00172 E.D.N.C.

After attending a training event at Camp Lejeune with the Navy Junior Reserve Officer Training Corps (NJROTC), minor Plaintiff brought an action for injuries sustained during a fall while participating in climbing exercise. Prior to attending the event, the minor's mother signed a waiver (on behalf of the minor) absolving the NJROTC from all liability, including that arising from its own negligence. Plaintiff attempted to argue that, as a matter of public policy in North Carolina, liability for negligence cannot be waived when a public interest is involved. While it held that protecting minors from harm is certainly a matter of public interest, the Court ruled that the countervailing public interest of allowing the NJROTC to conduct proper training events without fear of litigation was controlling in justifying the waiver. As a result, both the minor Plaintiff and her mother were prevented from disavowing the waiver while the Court granted summary judgment for the Defendant.

TORT/NEGLIGENCE
CONSTRUCTION DEFECT - STATUTES OF LIMITATIONS & REPOSE
Trillium Ridge Condominium Association, Inc. v. Trillium Links & Village, LLC
North Carolina Court of Appeals
2014 WL 4548658 (Permanent Citation Pending)

In a negligent construction matter, the Court of Appeals declined to apply a popular argument used by Plaintiff's attorneys as an attempt to circumvent the claim-barring effects of the six-year Statute of Repose. The Court ruled that the six-year Statute begins to run upon substantial completion (i.e., the last act of the contractor) of the given construction or repairs at issue. However, Plaintiff attempted to argue that an intermittent repair performed by Defendant equated to a new "last act", thereby resetting the six-year Statute of Repose from the date of that repair. The Court of Appeals disagreed with Plaintiff, ruling that an intermittent repair is not a "last act" for purposes of N.C. Gen. Stat. §1-50(5) unless it is a repair required by the contract in dispute. According to the Court, the Plaintiff has the burden of proving that an intermittent repair is required by the contract at issue in order to restart the six-year Statute of Repose.

TORT/NEGLIGENCE
MEDICAL MALPRACTICE - COLLATERAL SOURCE RULE
Nicholson v. Thom
North Carolina Court of Appeals
2014 WL 454518 (Permanent Citation Pending)

In a medical malpractice case that predates the October 1, 2011 effective date of Rule 414 of the NC Rules of Evidence, the Court of Appeals held that a hospital's write off of medical bills should have been presented to the jury as it is not a "collateral source of payment." The Court ruled that the collateral source rule excludes payments to a plaintiff by sources other than the defendant to an action if evidence of those payments is being used to diminish the defendant's liability. Since the hospital bills were written off or forgiven by the hospital as a business loss, those write offs are not considered "payment" and should therefore be presented to a jury as part of the bigger picture of a plaintiff's medical expenses.

MEDICAL TESTIMONY REGARDING CAUSATION
ALTERNATIVE THEORIES FOR BACK INJURY
Cole v. United Parcel Service, Inc.
North Carolina Court of Appeals
2014 WL 4292054

Plaintiff, an employee of Defendant UPS, injured his back through repeated lifting on the job. After an MRI revealed an infection, swelling, and facet joint degeneration at the L4 and L5 joints of Plaintiff's low back, he was hospitalized for the resulting treatment.

At trial, Defendant offered evidence that Plaintiff's diagnosis and treatment was actually caused by a pre-existing back infection. A physician who treated Plaintiff, Dr. Link, testified that the relationship between Plaintiff's back injury sustained at work and his diagnosis was murky by explaining that the injuries could have been caused in one of two ways - either Plaintiff got hurt and then sustained the infection, or the infection was pre-existing and the injury aggravated his already-vulnerable body.

Defendant argued that Dr. Link's testimony, since it did not point to only one cause, was speculative and was not rendered "to a reasonable decree of medical certainty." However, the Industrial Commission ruled, and the Court of Appeals affirmed, that either of the causation opinions offered by Dr. Link made Plaintiff's claimed injuries compensable. Since the pain was either caused by Plaintiff's injury, or the pain was an aggravation of an existing issue, Plaintiff's medical treatment and diagnosis were properly pieced together by Dr. Link's opinions.

HCW Retirement and Financial Services, LLC v. HCW Employee Benefit Services, LLC
The Supreme Court of North Carolina, August 28, 2013
WAIVER OF ARBITRATION REQUIREMENT

A dispute arose between owners of a financial services business regarding how votes are taken and how decision making authority was allocated. The owners of the business had agreed to submit all such disagreements to binding arbitration rather than litigation. Plaintiffs did not demand arbitration, but instead filed suit and initiated discovery by serving written discovery. Defendants responded by filing an Answer with a motion to compel arbitration. Defendants also objected to written discovery requests on the basis that the claims were subject to arbitration. However, the Defendants did take the deposition of one Plaintiff, lasting over ten hours. Roughly one hour of that deposition was spent addressing claims that were allegedly subject to arbitration. The trial court denied the motion to compel arbitration, finding 1) that the subject matter was outside the scope of the arbitration agreement and 2) that the Defendants had waived their demand for arbitration by using discovery methods not available to them in arbitration.

The Defendants appealed and the North Carolina Court of Appeals found that the claims were within the scope of the arbitration agreement but that the Defendants had impliedly waived their right to demand arbitration by using part of their deposition of the Plaintiff to inquire about those specific claims. The Court of Appeals noted that the party seeking to prevent arbitration has the burden of showing that they have been prejudiced by the moving party's actions. Here, it was argued that the Defendants were not allowed to take depositions during arbitration, and so the Plaintiffs had been prejudiced. Previous case law stated that prejudice may occur when the party opposing arbitration 1) is forced to bear the expense of a long trial, 2) loses helpful evidence, 3) takes steps in litigation to its detriment or expends significant amounts of money on litigation or 4) is subjected to discovery procedures that are not available in arbitration.

The Supreme Court of North Carolina reversed, finding that the Plaintiffs had not proven prejudice. The Supreme Court noted that the Defendants had objected to the written discovery and had used only one hour of a 10 hour deposition to question the Plaintiff about the claims subject to arbitration. Furthermore, the arbitration agreement stated that depositions "would be available in arbitration only if permitted by the arbitrator." The Court found that if depositions are available at the arbitrator's discretion, then they are not per se unavailable, and thus not prejudicial. The Court ordered those claims to be submitted to binding arbitration.

 

 

SUMMARY JUDGMENT - REQUEST FOR ADMISSIONS
Bost Construction Co. v. Blondy
North Carolina Court of Appeals, September 3, 2013

 

Plaintiff brought an action against Defendant for breach of contract for failure to pay all invoices related to the construction of her home. Defendant counterclaimed against the Plaintiff for various construction defects and the Plaintiff then named all subcontractors as Third-Party Defendants. Plaintiff asserted that the subcontractors performed all of the work, so to the extent that the Plaintiff was liable on the counterclaim, it should be allowed to recover any damages from the subcontractors.

The subcontractor who installed the fireplace served the Defendant with a series of requests for admission. The Defendant admitted that she did not contend that this particular subcontractor caused any of the Defendant's damages. The subcontractor used these responses as the basis for moving for summary judgment, which was granted by the trial court.

The Court of Appeals reversed summary judgment, and found that the Defendant's admissions could not be used to defeat the Plaintiff's claim against a Third-Party Defendant. The Court found that the Defendant's admissions "consist essentially of her own legal conclusions" and that "these statements did not constitute judicial admissions, as they did not serve to withdraw a particular fact from the realm of dispute." Furthermore, the Defendant's discovery responses "cannot establish conclusively whether Flue breached any such agreement with Bost."

Erie Ins. Exchange, et al v. Builders Mutual Ins. Co.
North Carolina Court of Appeals, May 21, 2013
INSURANCE COVERAGE - DATE OF OCCURRENCE

On September 21, 2007, TPB builder substantially completed the construction of a residence. TPB was insured by Erie Insurance from May 2006 through May 2009. TPB was insured by Builders Mutual Insurance from May 2009 through May 2010.

In December of 2009, over two years after construction was completed, a retaining wall at the residence collapsed, causing significant damage to the home. The homeowners filed an action against TPB and its subcontractors. Erie agreed to defend TPB under a reservation of rights and Builders Mutual refused to defend TPB, taking the position that the property damage occurred outside of its policy period, as the home was completed a year and a half before the Builders Mutual policy became effective. Erie initiated an action for declaratory relief against Builders Mutual and ultimately prevailed on a motion for judgment on the pleadings. The trial court determined that Builders Mutual had failed in its duty to defend TPB. Builders Mutual appealed.

The Court of Appeals noted that "the property damage to the Hardison's residence was caused by a single occurrence - the collapse of the altered slope and retaining wall - as defined in the defendant's insurance policy." When comparing this allegation to the terms and effective dates of the policy, the court found that Builders Mutual's duty to defend was "clearly triggered." Builders Mutual argued that the date of occurrence was not the date that the wall collapsed, but was "when the defect occurred from which all damages flowed." Builders Mutual further argued that the date the wall collapsed was merely the date that the damage manifested, a test that the state had not followed since the Supreme Court of North Carolina abolished it in Gaston County Dyeing Machine Co. v. Northfield Ins. Co. in 2000. It was Builders Mutual's position that the date the wall was defectively constructed was the date from which all damages flowed and that was consequently the date of occurrence for coverage purposes.

The Court of Appeals noted that the Gaston Dyeing decision did not state that the date of the "defect" was the date of occurrence, but that the date of the "injury-in-fact" was the date of occurrence. Had the court used the date of "defect" in Gaston Dyeing, the result would have been different. The Court of Appeals also distinguished this case from other recent decisions where damage had occurred over a period of time but was not discovered until later. In this case, the Court of Appeals found that the damage was a sudden event, and did not occur over an extended period of time. Therefore, the date of occurrence was in December of 2009 when the wall collapsed and damaged the home. Since Builders Mutual's policy was in effect at that time, they were the insurer on the risk.

The Court of Appeals affirmed the trial court, holding that the allegations in the underlying complaint clearly triggered Builders Mutual's duty to defend TPB, and that Builders Mutual was responsible for fully reimbursing Erie for the cost to defend TPB and the cost to settle the matter on behalf of TPB.

Applewood Properties, LLC v. New South Properties, LLC, et al.
The Supreme Court of North Carolina, June 13, 2013
SEDIMENTATION POLLUTION CONTROL ACT

The plaintiffs alleged that the defendant construction company violated the North Carolina Sedimentation Pollution Control Act of 1973 when a failed retention pond on the defendant's property allowed mud and silt to enter the plaintiffs' property and damage its golf course. On the defendant's motion for summary judgment, it was argued that the SPCA was intended to protect the natural waters of North Carolina and for the SPCA to be triggered, a natural body of water must be negatively affected. The trial court accepted the defendant's argument and granted summary judgment to the defendant on this claim. The case proceeded to trial under a negligence theory and damages were awarded to the plaintiff. Had the plaintiff prevailed on the SPCA claim, the court could have awarded attorneys fees to the plaintiffs.


Following trial, the plaintiffs appealed the summary judgment ruling, arguing that a body of water need not be affected in order to invoke the SPCA. By a 2-1 vote, the North Carolina Court of Appeals affirmed the trial court, holding that a body of water must be affected in order to bring an action under the statute.

The plaintiff appealed to the Supreme Court of North Carolina, and the court held that the plaintiff lacked standing to pursue a private cause of action under the SPCA, as the defendants had not been cited for a "violation" of the Act prior to initiating suit. The only evidence before the court was that the defendant had received notices of non-compliance and various warnings from the Division of Water Quality, but had not been cited for a violation. Dean Gibson Hofer & Nance served as counsel for the defendant.

Bridges v. Parrish
The Supreme Court of North Carolina, June 13, 2013
NEGLIGENCE - DUTY TO SECURE FIREARM

52 year old Bernie Parrish shot the Plaintiff in the abdomen at her workplace with his parents' firearm after she ended their relationship. In her complaint for personal injury, the Plaintiff only named Bernie Parrish's parents as defendants. It was alleged that the parents were aware of Parrish's violent nature towards women, including multiple felony charges and convictions, and that despite this knowledge, the parents allowed him to have access to their firearms. The trial court dismissed the complaint for failure to state a claim.

The Court of Appeals and Supreme Court both affirmed the dismissal, finding that the Defendants did not owe any legal duty to the Plaintiff. The Supreme Court noted that "the criminal acts of a third party are generally considered 'unforeseeable and independent, intervening causes absolving the defendant of liability" and "for this reason, the law does not generally impose a duty to prevent the criminal acts of a third party." One exception to this rule is where there is a special relationship between the plaintiff and defendant. In this case, there were no allegations of such a special relationship. The Court went on to state that "The mere possession of a legal yet dangerous instrumentality does not create automatic liability when a third party takes that instrumentality and uses it in an illegal act. As long as the dangerous instrumentalities are kept in accordance with statutory regulations, the law does not impose civil liability under the present circumstances."

N.C. Farm Bureau Mut. Ins. Co. v. Smith, et al.
North Carolina Court of Appeals, May 21, 2013
COVENANT NOT TO EXECUTE - MULTIPLE INSURERS

Claude, Marcella and Charlotte Savage were involved in a motor vehicle accident with Phillip Smith. Mr. Smith was insured by a liability policy issued by Allstate. It was alleged that Mr. Smith was a resident of his parents' home at the time of the accident and that he was therefore also an insured under his father's Farm Bureau liability policy. Each of the Plaintiffs accepted payment from Allstate in exchange for a covenant not to execute against Mr. Smith.

Farm Bureau filed an action for declaratory relief asking the court to find that there was no coverage under its policy because its purported insured could no longer be required to pay any judgment against him as a result of the covenants not to execute. The trial court found that the covenants did bar coverage, and the Court of Appeals affirmed, finding that in light of the covenants not to execute, Mr. Smith cannot be "legally responsible" or "legally obligated to pay" any additional amount, and therefore the Farm Bureau policy could not provide coverage for the loss.

Fulmore v. Howell and PFS Dist. Co., Inc.
North Carolina Court of Appeals, May 7, 2013
SUDDEN EMERGENCY

Defendant Howell was driving a tractor trailer when a vehicle entered his lane and approached him head-on. In response, Howell slammed on his brakes and steered away from the oncoming vehicle. Howell was not able to avoid the collision with the oncoming vehicle and his truck also struck a third vehicle. The driver of the third vehicle sustained fatal injuries in the accident and her estate filed suit against Howell. In response to the plaintiff's complaint, Howell asserted the affirmative defense of Sudden Emergency as a complete bar to the plaintiff's claim.

Howell testified that he had only a moment to react to the oncoming vehicle and he did his best to avoid the collision. Howell then moved for summary judgment on the issue of Sudden Emergency and the trial court granted the motion. The Court of Appeals, noting that "The doctrine of sudden emergency creates a less stringent standard of care for one who, through no fault of his own, is suddenly and unexpectedly confronted with imminent danger to himself and others," affirmed summary judgment in favor of the defendant.

Despite some evidence that the defendant may have been able to avoid the accident if he reacted differently, the court held that "In the face of an emergency, a person is not held to the wisest choice of conduct, but only to such choice as a person of ordinary care and prudence would have made in similar circumstances.... Accordingly, while defendant Howell could have had other reactions to the sudden emergency which may have resulted in a different outcome, this does not create a 'genuine issue of material fact'."

The Town of Sandy Creek v. East Coast Contracting, Inc. et al.
North Carolina Court of Appeals, April 16, 2013
GOVERNMENTAL IMMUNITY

The Town of Sandy Creek filed suit against several construction companies when the town's roads were damaged by a sewer project that the companies were engaged in on behalf of The City of Northwest. One of the construction companies filed a third-party complaint against Northwest. In response, Northwest asserted the defense of governmental immunity on the grounds that constructing and operating a sewer system is a governmental function. The third-party plaintiff argued that the city was acting in a proprietary capacity at the time of the injury, and therefore the city was not entitled to governmental immunity.

The Court of Appeals ultimately found that governmental immunity did not apply, as "we remain convinced that a local governmental unit acts in a proprietary function when it contracts with engineering and construction companies, regardless of whether the project under construction will be a governmental function once it is completed."

Vaughn v. Pike Electric, LLC, et al.
North Carolina Court of Appeals
Nov. 19, 2013

Decedent Gary Vaughn was killed in October of 2009 during his employment with Pike Electric. The Plaintiff alleged that Vaughn was employed as a groundman for Pike, and that his job was to assist foremen, linemen and other employees. He was not trained or permitted to work on poles with energized power lines. On the date of his death, Vaughn had been employed for only two months and had received limited training. He was instructed by his supervisor, Kenneth Penland, to climb a pole and begin retrofitting a transformer. During this process, Vaughn was electrocuted and died. Vaughn's estate was awarded benefits pursuant to the Worker's Compensation Act.

The Estate then filed a complaint against Pike Electric and Penland, alleging that their egregious conduct caused Vaughn's death. Pike Electric and Penland both moved to dismiss the Plaintiff's claims on the basis that the Worker's Compensation Act provides the exclusive remedy for a worker against his employer and co-workers when the worker is injured during the course and scope of his employment. The trial court denied both motions to dismiss and the Defendants appealed.

On appeal, while noting that such claims are generally barred by the exclusivity provision of the Worker's Compensation Act, the Court of Appeals discussed the differences in the claims against the employer (Pike Electric) and the co-worker (Penland).

In Woodson v. Rowland, 329 N.C. 330 (1991), the North Carolina Supreme Court held that an injured employee may properly bring a claim against his employer if 1) the worker suffered injury or death and 2) the employer intentionally engaged in misconduct knowing that such conduct was substantially certain to cause serious injury or death. In sum, an injured worker needs to allege that his employer was engaged in intentional misconduct which caused the worker's injury. As stated in the Woodson opinion, "[intent] extends not only to those consequences which are desired, but also to those which the actor believes are substantially certain to follow from what the actor does. This is the doctrine of 'substantial intent'."

In contrast, when an injured worker seeks to pursue a claim against his co-worker, the injured worker must show only that the co-worker acted with willful, wanton and reckless negligence. Pleasant v. Johnson, 312 N.C. 710 (1985). "[W]illful, wanton and reckless negligence is present when a co-employee intentionally fails to carry out some duty with manifest indifference to the consequences resulting from that failure." Willful, wanton and reckless negligence requires something more than ordinary negligence, but does not require intent or "substantial intent." Willful, wanton and reckless acts fall somewhere between ordinary negligence and intentional acts.

The Court therefore held that to survive a motion to dismiss, a plaintiff must allege that his employer's actions amounted to intentional misconduct. In reviewing the Complaint here, the Court noted that it was never alleged that Pike Electric had notice of the alleged hazard, accepted and encouraged the practices performed in the field or had notice of Penland's alleged history of ignoring safety requirements. The Court points out that the Complaint does allege that Vaughn was instructed to climb the pole by Penland "in clear violation of Pike Electric's own methods and safety manuals." The Court found that the inference to be taken from this allegation is that Pike Electric clearly did not condone Penland's actions. "Simply put, Plaintiff offers no basis to believe that Pike Electric was aware of, intended, or was substantially certain that Penland's actions on that day would result in Decedent's death." As a result, the Plaintiff's claim against Pike Electric was dismissed.

The analysis of the claims against Penland is significantly different. As to Penland, it was alleged that he knew Vaughn was not properly trained for the type of work that he was being asked to do, knew that Vaughn was not allowed to perform the type of work he was being asked to do and knew that he lacked any experience in performing this type of work. While these allegations do not rise to the level of intentional misconduct on the part of Penland, they do "create an inference that Penland was manifestly indifferent to the consequences of his actions" for purposes of deciding a motion to dismiss. The Plaintiff was allowed to pursue her claim against co-worker Penland.

Frazier v. Carolina Coastal Railway, Inc. and the Town of Knightdale

NO. COA 13-426

Nov. 19, 2013

 

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