New Order Closes State Courts Through May 1 (if not June 1) For Most Business

By Kevin Stanfield and PJ Puryear

A few days ago, we provided the section an update on extensions and closures due to COVID-19. With another week comes yet another update, this by way of an Order from Chief Justice Beasley.

Pursuant to N.C.G.S. § 7A-39(b)(2), Chief Justice Beasley has issued seven emergency directives which we have summarized below. The Order itself is not long, and we highly encourage everyone to read it, to ensure your staff and firm are familiar with the changes it provides, and we also strongly encourage you to make your clients aware of how this affects not only proceedings that may be pending, but their accessibility to our state courts for the next 30 if not 60 days.

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Update on Closures, Extensions, and Staying at Home – COVID-19

Jacob Morse

PJ Puryear

By Jacob Morse and PJ Puryear

Last week, NCBA Litigation Section members provided an overview of court closures and deadline extensions due to COVID-19. This post is to provide an update, as well as to highlight resources that have become available to practitioners and the public.

Trial Courts

On Friday March 13, 2020, Chief Justice Cheri Beasley of the Supreme Court of North Carolina entered an order continuing most District and Superior Court hearings and trials which were scheduled to take place between March 16, 2020 and April 16, 2020. On March 19, 2020, the Chief Justice issued a second order affecting most filings and acts which were due to be filed or done from March 16, 2010 through April 17, 2020. These orders removed the affected hearings or trials from court calendars and extended all deadlines for filings and other actions (which we believe includes, but is not limited to items such as discovery) through April 17, 2020. On March 23, 2020, Chief Judge Louis Bledsoe of the North Carolina Business Court entered an administrative order formally stating that the Chief Justice’s March 19, 2020 order also applies to all matters pending in front of Business Court Judges.

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North Carolina Judicial Branch – Updated Emergency Order re: COVID-19

Martha J. Efird

Jonah Garson

By Martha J. Efird and Jonah Garson

Effective immediately and by Order of Chief Justice Beasley, all court documents due to be filed in any non-appellate state court on or after March 16, 2020 and by April 17, 2020 will be deemed timely if filed by the close of business on April 17, 2020. You can find the accompanying press release here, and below is a quick summary:

  • Relevant language: “[A]ll pleadings, motions, notices, and other documents and papers that were or are due to be filed in any county of this state on or after 16 March 2020 and before the close of business on 17 April 2020 in civil actions, criminal actions, estates, and special proceedings shall be deemed to be timely filed if they are filed before the close of business on 17 April 2020.” Beyond filings, the Order also applies to “all other acts that were or are due to be done [in civil actions, criminal actions, estates and special proceedings] in any county of this state[.]”
  • The Order applies to filings subject to statute of limitations periods expiring between March 16, 2020, and April 17, 2020 (the Order does not, however, toll statutes of limitations; it has no effect on statutes of limitations that are due to expire on or after April 18, 2020).
  • The Order does not apply to any appellate court filings. However, the Supreme Court has issued a catastrophic conditions order and appellate court arguments are being postponed. For more information on this, see Beth Scherer’s post here.
  • The Clerks of Superior Court in Wake County and Mecklenburg County are reducing their hours of operation and staffing, and other districts may soon follow suit. Wake County Clerk of Superior Court counters will be open 1 p.m. to 5 p.m., and filers are encouraged to use drop boxes on the first floor of the courthouse. The Mecklenburg Clerk of Superior Court’s office will be open 9 a.m. to 12 p.m., and emergency and essential filings will be accepted between 12 p.m. and 5 p.m. at the Criminal Magistrate’s Office. Clerks are requesting that attorneys please not come to courthouse facilities unless required to do so.
  • At publication time, sheriff’s offices remain open as normal and are receiving and serving papers.

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Ethical Considerations for North Carolina Litigators During COVID-19

Amy Richardson

Marilyn Forbes

By Amy Richardson and Marilyn Forbes

COVID-19 (coronavirus) has created uncertainty in all areas including in our professional lives. The following are a few ethical considerations that litigators should keep in mind during this time.

COMMUNICATION: Make sure to update and timely respond to your clients. North Carolina Rule of Professional Conduct 1.4 governs communications between lawyers and their clients. Rule 1.4 requires, among other things, that lawyers keep their clients “reasonably informed about the status of the matter.” Clients with pending matters may be concerned about the impact of Chief Justice Beasley’s March 13, 2020 Order on their particular case. Lawyers with cases impacted by the Order should provide guidance to their clients on the current impact and potential impact of the matter. It is appropriate to tell your clients that things are in flux, but that you are monitoring developments.

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Fight Hunger, Help Others in the COVID-19 Pandemic – Participate in the Legal Feeding Frenzy and Support Your Local Food Bank!

By Will Quick

Our section membership has a strong tradition of supporting and participating in pro bono and community service activities—both those planned and sponsored by the NCBA and those that you undertake on your own or with other organizations. We are in unprecedented times with COVID-19 (Coronavirus), and I am confident that each of you is doing your part.

Even in the best of times, however, over 1.5 Million North Carolinians struggle with hunger—of those, nearly half a million are children. With public schools and many religious and nonprofit organizations that traditionally serve the food insecure in our communities being closed for indefinite periods, and government leaders calling for social distancing to help limit the spread of Coronavirus, that need is never more pressing than now.

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Judicial Update – COVID-19

By Martha J. Efird

Litigation Section members should pay particular attention to today’s announcement by Chief Justice Beasley regarding the operation of the North Carolina court system during the outbreak of COVID-19 (coronavirus). For your convenience, a link to the announcement is here.

In summary, the Chief Justice’s Order states the following:

EFFECTIVE MONDAY, MARCH 16, 2020, for 30 days, Chief Justice Beasley ordered the rescheduling of District and Superior Court proceedings calendared between March 16 and April 16. No District or Superior Court matters can be added to the calendar during the 30-day period either.

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E-Discovery Pitfalls: Cell Phone Retention Settings Can Lead to Sanctions for Spoliation of Evidence

By J. Blakely Kiefer

Imagine this scenario: You are an employee who uses your personal cell phone for company purposes to send and receive business-related text messages. Litigation ensues and you, as part of your employment, receive from the company a preservation notice or litigation hold notifying you to preserve and not delete communications relevant to the issues raised by the litigation. Text messages are included within the definition of communications for discovery purposes. A discovery request is served on the company seeking all communications relevant to the litigation, which requires the company and you, as someone with responsive information, to produce your text messages. Only then do you discover that your cell phone has certain retention settings, and is set to automatically delete text messages after thirty (30) days. While you had responsive text messages that should have been produced in litigation, you no longer have those messages because your phone automatically deleted them. Your deleted text messages not only place you in violation of your company’s preservation notice and/or litigation hold, but could potentially result in the company being sanctioned in the litigation for destroying or failing to preserve relevant evidence. Sound farfetched? It’s not.

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Being “Uber” Careful with Client Confidential Information

By Marilyn Forbes 

While the ubiquitous use of our cellphones allows us to make efficient use of travel time to talk with clients or about client matters, there is a new reason to be “uber” careful when conducting business while using ride services.

A fundamental rule of client representation is that we must keep our clients’ secrets. NCRPC Rule 1.6 (a) provides that a lawyer “shall not reveal information acquired during the professional relationship with a client unless the client gives informed consent, the disclosure is impliedly authorized in order to carry out the representation or the disclosure is permitted by paragraph (b) [which provides specific exceptions such as preventing the commission of a crime.]”  Additionally, and just as important, “a lawyer shall make reasonable efforts to prevent the inadvertent or unauthorized disclosure of, or unauthorized access to, information relating to the representation of a client.” Rule 1.6 (c). This includes, among other things, being mindful of when and where you to talk to or about clients.

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When Tiptoeing Around the Securities Exemption to North Carolina’s Unfair and Deceptive Trade Practices Act, Take Each Step Carefully

By Stephen Feldman

North Carolina law prohibits unfair and deceptive trade practices, but not if those practices concern securities transactions.

The state supreme court announced this exemption in 1985 in Skinner v. E.F. Hutton & Co. The court expanded on the exemption’s reach in a 1991 decision called HAJMM Co. v. House of Raeford Farms, Inc. Thanks to these decisions, a plaintiff who alleges a violation of N.C.G.S. Section 75-1.1 about a securities transaction better have a sound argument on why Skinner, HAJMM, and their progeny don’t bar the claim.

This post concerns a recent North Carolina Business Court case called Beam v. Sunset Financial Services, Inc., in which the plaintiffs faced this situation and thought they had a winning game plan to sidestep these decisions.

Spoiler alert: it wasn’t a winning game plan.

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North Carolina Expands Civil Protections for Military Servicemembers

By Rick Conner

The North Carolina Servicemembers Civil Relief Act (“NCSCRA”), which took effect on October 1, 2019, expanded the rights of servicemembers and their dependents living in North Carolina.  The new law is codified in Article 4 of Chapter 127B, and can be found here.

The NCSCRA incorporates the federal SCRA (codified in Chapter 50 of Title 50 of the United States Code) into North Carolina law.  The federal SCRA, originally enacted in 2003 and amended several times since then, provides protections for members of the military who enter active duty, and covers issues such as rental agreements, security deposits, evictions, credit card interest rates, mortgage interest rates and foreclosures, civil judgments and proceedings, automobile leases, life insurance, health insurance, and income tax payments.

The NCSCRA expands beyond the scope of the federal SCRA by extending its protections to   include members of the North Carolina National Guard serving on active duty, and members of other states’ National Guard serving on active duty who live in North Carolina.

The NCSCRA also provides dependents (as defined in 50 U.S.C. § 3911(4)) of servicemembers some of the same rights and protections as servicemembers, including protections against default judgments, stays of certain proceedings including child custody, stays of certain fines or penalties under contracts, interest rate limitations, and tolling of statutes of limitations.

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