Gratitude: Chair Reflects On Her Year

By Leslie Pegram

Gratitude is defined as the quality of being thankful; readiness to show appreciation for and to return kindness. As my time as Paralegal Division Chair comes to an end, I want to express my gratitude for the opportunity to contribute to the success of the North Carolina Bar Association Paralegal Division.

I’m grateful to have been surrounded by so many amazing volunteers, leaders, mentors and friends. I am simply in awe of how our members share their time, talents and passions to the betterment of the community, profession, Division and Association. Our members are volunteers serving in various capacities including (but not limited to) Council Members, Committee Chairs, Section Liaisons, CPE planners, notaries/witnesses for Wills for Heroes, mentors, listserv participants and more. For each person who takes time to serve, thank you.

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I learned one thing last week: Wellness is about balance.

During wellness expert Laura Mahr’s NCBA Annual Meeting CLE session, attendees physically embraced wellness techniques.

By Josh McIntyre

It’s hard to avoid the topic of wellness in the legal world these days. Whether it’s a new ABA initiative, an article in last month’s N.C. State Bar Journal, or our own North Carolina Bar Association Annual Meeting, the good news is that the legal community locally and at large seems to be embracing the reality that the stress of our profession is high and we have to take intentional, mindful steps to promote a healthy workplace and lifestyle.

This topic was front and center for me last week, when nearly 700 NCBA members and guests came to Biltmore for our 2019 Annual Meeting. My department is responsible for this event, and our staff spent countless hours over the past year finding speakers, booking activities and setting up dinners and luncheons, nearly all of which included some aspect of our overarching theme of Wellness: Work, Mind, Body, Life.

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Business and International Law Issues Covered At Pinehurst Retreat

See Your Name in Print!  Folks, it’s been some time since we’ve posted.  Before you take a look at this edition, here’s a brief announcement:  The Business Law Section would love  your help with ideas and articles for future posts.  If you have an article you’re working on, thoughts about current developments in law practice management or attorney wellness, an internal firm analysis of a legal issue that you’d like to share (with permission, of course), or information about a recent conference, please let us know.  The circulation we get is quite broad – one of our blog posts this year has nearly 7,000 views at this time.  Please reach out to  abbie@bayneslaw.com with content and ideas.

The next few blog posts will catch you up on recent events around the Section.

By Russ Robinson

Business and international lawyers from across the state converged at the Pinehurst Resort earlier this spring for annual section meetings and CLE courses. The mid-February event for the Business Law Section has been an annual event for more than 30 years, and recently the International Law & Practice Section has joined forces as both sections focus on developments in business.

Key themes in this year’s session included technology and the 2018 changes to the North Carolina Business Corporation Act.

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Book Review: The Life and Times Of a Union Organizer At a Tennessee Textile Mill

By Jonathan Harkavy

The Jackson Project
By Phil Cohen
The University of Tennessee Press, 2016

Phil Cohen’s memoir of his days as a union organizer at a troubled southern textile mill is a worthwhile read for any audience. The book’s subtitle, “War in the American Workplace,” is a pithy summary of the author’s main point about unionization in our country. Mr. Cohen traces a tortuous and (spoiler alert) ultimately unsuccessful battle to save the jobs and preserve the dignity of hundreds of mill workers in Jackson, Tennessee. On a deeper level, the book portrays Mr. Cohen’s own struggle to juggle his many roles as a relentless proponent of workplace justice, a trusted confidant of the workers he represents, an effective adversary of mill owners and management, a faithful employee of the Amalgamated Clothing and Textile Workers Union, and – not incidentally at all – a loving father to his pre-school daughter.

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The Medical Informatics HIPAA Settlement: Implications for the Future of State Data Security Enforcement

By Alex Pearce and Sean Fernandes

Last month, the attorneys general (“AGs”) of sixteen states, including North Carolina, settled a multistate HIPAA enforcement lawsuit against Medical Informatics Engineering (MIE), a cloud-based electronic health records vendor.

The lawsuit was the first time that state AGs have joined together to pursue a HIPAA-related data breach case in federal court.

This post explores the case, State of Indiana v. Medical Informatics Engineering, and its potential implications for future state data security enforcement efforts.

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Exceptions to the Economic Loss Rule in North and South Carolina

In North Carolina, the economic loss rule will not bar recovery on a negligence claim when there is no contract between the parties. In Lord v. Customized Consulting Specialty, Inc., a general contractor contracted with the plaintiff owners to construct a home. The owners subsequently sued the general contractor for alleged defects in the home’s construction. The general contractor named as defendants the subcontractors with whom the general contractor had contracted with to provide the trusses for the home. These subcontractor defendants asserted that the economic loss rule should apply to bar the plaintiffs’ negligence claim against them. The court acknowledged that, “simply stated, the economic loss rule prohibits recovery for purely economic loss in tort, as such claims are instead governed by contract law.” However, the court recognized the economic loss rule is not fair to those plaintiffs who have suffered economic loss or damage from improper construction but “who have no basis for recovery in contract” in the absence of a contract between the parties. Therefore, the court held “that the [subcontractor defendants] had a duty to use reasonable care in performing its promise to provide reliable trusses to [the general contractor] for use in the construction of the [plaintiffs’] residence, and it further held that because there was no contract between the plaintiffs and the subcontractor defendants, the economic loss rule did not apply and therefore did “not operate to bar the plaintiffs’ negligence claims.”

The North Carolina Court of Appeals recently acknowledged in the 2016 case Buffa v. Cygnature Constr. & Dev., Inc., 796 S.E.2d 64 (unpublished) Lord’s holding that the economic loss rule does not bar a negligence claim where there is no contract between parties in a home construction case. However, the court qualified this holding by stating that “where a basis for recovery is available by warranty,” the economic loss rule will apply to prevent recovery for purely economic loss under a negligence claim. In this case, the plaintiffs sustained damage to their home as a result of defective windows. The seller of the windows did not have a contract with the plaintiffs, as the windows were purchased by the subcontractor who installed the windows. These windows were covered by the manufacturer’s express warranty. Because a basis for recovery was available by warranty, the court held that it was appropriate to apply the economic loss rule to bar negligence claims seeking to recover for purely economic loss.

However, it may be important to note that the Buffa case concerned an express warranty. A more detailed analysis may be required as to the issue of whether an implied warranty would bar a negligence claim per the economic loss rule, but the general rule in North Carolina is that a contract “is required to assert a claim for breach of an implied warranty involving only economic loss.” Energy Inv’rs Fund, L.P. v. Metric Constructors, Inc., 351 N.C. 331, 338, 525 S.E.2d 441, 446 (2000). Therefore, the economic loss rule will likely bar negligence claims if a court has recognized the existence of an implied warranty, because an implied warranty typically only exists when there is a contract between parties.

South Carolina law is complicated in that there are a number of uncoordinated opinions touching on the subject. However, similar to the Lord case above, the South Carolina Supreme Court has ruled that the economic loss rule will not bar a negligence action against a builder when a legal duty has been violated, “no matter the type of resulting damage. . . . But the economic loss rule will apply [to bar negligence actions] where duties are created solely by contract.” Kennedy v. Columbia Lumber & Mfg. Co. This case further emphasized that “privity of contract as a defense to an implied warranty action” has been abolished in South Carolina. So, unlike in North Carolina, the existence of an implied warranty is not likely to bar a negligence claim for economic loss in South Carolina where there is no contract between the parties. Further, in Beachwalk Villas Condo. Ass’n, Inc. v. Martin, the holding in Kennedy was expanded to architects in addition to builders, as the court stated that “architects may be held liable to home buyers for negligence in connection with home construction projects and breach of implied warranty where no contractual privity exists between the architect and the home buyer.” However, the South Carolina Supreme Court has since held that the principle set forth in Kennedy is limited to the residential real estate construction context. Sapp v. Ford Motor Co.

In sum, in both North and South Carolina the economic loss rule will not apply in certain instances to bar recovery for purely economic loss in tort, although the justification for such an exception may differ somewhat between the two states. Therefore, if a party seeks to recover for pure economic loss and does not have adequate recourse via typical contract law, it would be wise to explore the various exceptions in North and South Carolina regarding the economic loss rule when bringing a claim.

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Demystifying Paralegal Credentials for Lawyers and Paralegals

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By Alicia Mitchell-Mercer

Recently, I overheard a discussion regarding whether attorneys understand the content of paralegal programs and the meaning of the post-nominal certification credentials you increasingly see behind paralegals’ names. One person responded that many fledgling paralegals don’t understand the difference between being certified and having a certificate, so how can attorneys be expected to understand these distinctions. While these issues may not seem pressing, they are important.

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Appellate Update

By Joe Murray

It’s our semi-regular roundup of appellate decisions, with two non-appellate highlights at the end.

McCaffery v. Chapman, No. 17-2198 (4th Cir. April 9, 2019) (1st Amendment): Why does anyone want to be a sheriff’s deputy? It seems to have all the negatives of being a government employee with even fewer benefits. McCaffrey supported Sheriff Chapman’s political opponent during an election campaign. After Sheriff Chapman won, he did not reappoint McCaffrey as a deputy sheriff. McCaffrey sued, alleging that Sheriff Chapman’s failure to reappoint him violated his First Amendment rights to freedom of political association and speech. The 4th Circuit upheld the dismissal of McCaffrey’s political association claim based on the Elrod-Branti doctrine, which allows public officials to terminate public employees who meet certain criteria for supporting a political opponent. The court easily dismissed McCaffery’s Pickering-Connick retaliation (political speech) claim since once the Elrod-Branti doctrine applied “the Pickering balance generally tips in favor of the government because of its overriding interest in ensuring an elected official’s ability to implement his policies through his subordinates.”

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Records Section Needs Your Input On Developing New Models

By Michael Thelen

With appreciation to Government and Public Sector Section Council member Ann Wall, general counsel to the Secretary of State and professional knower-of-things, the Section Council has been alerted to an important message and opportunity from Whitney Ray. Whitney, of course, is a records management analyst with the North Carolina Department of Natural and Cultural Resources.  While all Section members are encouraged to read Whitney’s message, we think this post will be of particular interest to the local government attorneys within the Section.

Essentially, the Government Records Section of the State Archives of North Carolina is updating its model local records retention schedules and, in that process, is inviting input from stakeholders (for our sake, local government attorneys and their colleagues within the local governments) as the new models are developed.

Please read the message from from Whitney Ray here and follow these links to access the New Retention Schedule Model for North Carolina Local Governments and an explanation of How to Adopt the New Local Government Retention Schedules.

Mike Thelen is rising chair (2019-2020) of the Government and Public Sector Section of the North Carolina Bar Association.

Working In the Alcohol Industry

By Mollie Schwam

Before I started working at Beer Law Center I had no idea about the mountain of paperwork that selling alcohol entailed. I was not even aware about the particular process that businesses had to go through in order to sell alcohol. I tell people that I work with alcohol rules and regulations, because sprouting out a list of acronyms such as ABC, TTB, COLA, etc. does not make much sense to people who are not familiar with this type of work. Very few law firms are solely devoted to alcohol laws and regulations. In addition to the application process, I did not know that alcohol law can overlap and influence other areas of law.

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